Tonight, some things to be cheery about. Plus: There's even more evidence that self-checkout is a scourge that retailers (largely) regret. Let's get into it. By Allison Morrow |
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| | Last updated January 24 at 6:59 PM ET | |
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Ah, January. The sun still sets way too early, everything is kinda gray, and it's physically impossible to land on a sweater-and-coat combination that keeps you warm while walking the dog but not boiling on the subway. Spring is coming, but to get there we'll have to make it through the veritable Hunger Games course known as February. May the odds be ever in our favor. With all of that said, there are some (non-weather-related) bits of news from the economy this month that can give us all a little bit of encouragement. Chief among them: Your 401(k) is on fire, gas prices are waaaay down, and the housing market is becoming ... less awful. My colleague Bryan Mena breaks it all down. Stocks are soaring - Tl;dr: If you have a retirement account, now might be a nice moment to take a peek at it.
- After a rough start to the month, the US stock market rallied last week, thanks to renewed enthusiasm for Big Tech (read: AI hype).
- The benchmark S&P 500 rose to notch another new record-high close on Tuesday, as the Dow Jones Industrial Average topped 38,000 for the first time on Monday.
- There's a decent chance the US pulls off a soft landing — bringing inflation down to 2% without crashing into a recession — which could keep the Wall Street party going.
Better moods - Tl;dr: People feeling better about the economy is good for the economy. The University of Michigan's latest consumer survey showed that sentiment rose in the first half of January to its highest level since July 2021, after surging 29% over the past two months.
- A lot of that improvement had to do with inflation cooling, especially gas prices. The national average price for a gallon of gasoline stood at $3.09 Wednesday, according to AAA, down from $3.45 a gallon a year ago.
- Generally, when consumers feel good, they spend more, and that's the fuel that keeps the US economic engine humming.
- A caveat: The correlation between sentiment and spending isn't perfect.
- "The power of those surveys in predicting consumer spending has been limited at best over recent quarters," James McCann, deputy chief economist at investment firm Abrdn, told CNN. "But it obviously has some political implications for the Biden camp because it could be an indicator that low approval in the polls may start to reverse."
A slowly improving US housing market - Tl;dr: The impenetrable US housing market — with its record prices and soaring mortgage rates — is loosening up. Slowly.
- Mortgage rates fell last week to the their lowest level since May, with the 30-year fixed-rate mortgage averaging 6.6%. Rates peaked at 7.79% last year, so they're already down more than a full percentage point. Of course, they're still roughly double the levels we saw in 2021.
- Meanwhile, homebuilders' confidence has improved this month, a potential indicator that the supply of homes will increase this year.
Bottom line: Progress and healing often feels like an inch-by-inch slog, not unlike walking Brooklyn sidewalks this week. But when it comes to the economy, there's a bit of a self-fulfilling prophecy in thinking positive. Be the good vibes you want to see in the world, or whatever. |
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The very lonely $3 Trillion Club has a new member. On Wednesday, Microsoft shares briefly rose 1.5%, making it the second publicly traded company ever to surpass a $3 trillion market value. (The other company to achieve that feat, of course, is Apple.) All the Wall Street enthusiasm is linked directly to Microsoft's positioning as a leader in artificial intelligence through its partnership with OpenAI, the creator of the wildly successful ChatGPT. For context: Microsoft's market value now eclipses the entire GDP of France. And it's just shy of the entire economic output of the United Kingdom. |
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The scourge of self-checkout is well documented. It leads to more theft (especially the accidental variety), more scanning errors, and it has been linked to an 87% increase in the number of exasperated sighs from customers. (OK that last one is made up, but, like, it's still directionally true.) Now, my colleague Nathaniel Meyersohn writes, researchers have found another another hitch in the self-checkout model: fading customer loyalty. A new study by researchers at Drexel University found that "regular checkout" — the kind featuring a human cashier — makes customers more loyal to a store. Customers feel like they were treated "more valuably" when using regular checkout because cashiers handle the work of scanning and bagging. You know, their jobs. Regular checkout also makes customers feel they are receiving an actual service, the study found. The upshot is that customers feel taken care of, rather than made to do unpaid labor, and that makes them more likely to come back. The study, published in the Journal of Business Research, comes as retailers are rethinking the self-checkout model that many were eager to roll out on the promise that it would reduce labor costs. But a few years in, the benefits may not be offsetting the drawbacks. Companies with self-checkout lanes and apps had a loss rate of about 4%, more than double the industry average, according to a study that examined retailers in the United States, Britain and other European countries. - Walmart, ShopRite and Booths, the British chain, are among the major retailers that have scaled back their use of self-checkout machines.
- Five Below, the discount toy retailer, recently said that merchandise losses were higher at stores with more self-checkout lanes. It is now increasing the number of staffed cash registers in new locations.
- Dollar General said it started to rely "too much" on self-checkout, and would re-assign workers to the front of its stores to run the registers.
- Target has restricted self-checkout to customers buying 10 items or less.
- And Costco is putting more humans in its self-checkout lanes after it found that non-members were getting away with using membership cards that didn't belong to them. (The cardinal sin of wholesale shopping).
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Last updated January 24 at 4:00 PM ET | |
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