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Checking in on the economy ahead of election season


Walmart and Home Depot are cautiously upbeat as they survey the economic landscape. At least that's how it sounded as they reported their earnings this week. That's because Americans are feeling a little better. The economy almost always tops lists of issues most important to voters. NPR business correspondent Alina Selyukh and NPR chief economics correspondent Scott Horsley join us now. Thank you both very much for being with us.


SCOTT HORSLEY, BYLINE: Good to be with you.

SIMON: Scott Horsley, what's behind this change of mood?

HORSLEY: You know, people are still unhappy about high prices, but wages have been going up faster than prices now for the better part of a year. Gas prices are still relatively low, although they've been inching up in the last few weeks. And, of course, the stock market keeps hitting record highs, which tends to lift people's spirits even if they don't own a lot of stock. So the University of Michigan's Index of Consumer Sentiment has been on an upswing now since December. It's not great, but people's mood is getting better.

SIMON: Alina, you've been tracking Home Depot and Walmart. And of course, they have to know what shoppers want, what they're willing to pay. That's how they stay in business. We say - you prompted me - they are upbeat but cautious.

SELYUKH: (Laughter).

SIMON: Cautious but upbeat. What do we really mean?

SELYUKH: Yeah, so they're upbeat because shoppers are still going out and shopping. They are cautious because shoppers are still carefully watching their budgets. And also - and this is kind of newish - some prices have started to come down. For example, Walmart already says - actually, for the first time in a while - that shoppers are spending a bit less each time they visit a Walmart store. Walmart says it's because they've been able to lower more prices. Here's CEO Doug McMillon.


DOUG MCMILLON: In food, prices are lower than a year ago in places like eggs, apples and deli snacks but higher in other places like asparagus and blackberries.

SELYUKH: Which I guess means you got to watch out for your asparagus and blackberry pie (laughter).

HORSLEY: Is that a real thing?

SELYUKH: It is now on (laughter) National Public Radio. Well, so...

SIMON: Someone's going to hear it and try it. But go ahead. Yes.

SELYUKH: Please write to me if you do. McMillon also called out French bread, actually, which apparently used to be a dollar, then got pricier with inflation, and it's now back to a dollar.

HORSLEY: You know, if you look at grocery prices overall, they're up just a little over 1% this past year, which is, you know, very modest price increase. Restaurant prices, on the other hand, are up more than 5%. And yet people are still eating out. Spending at restaurants is still going up.

SIMON: Now, Home Depot is a whole different kind of shopper 'cause they're looking for different kinds of merchandise. What did you find out there, Alina?

SELYUKH: So Home Depot, as a company, has really been feeling the pain of people tightening their budgets for quite a while. People have been sticking to smaller home improvement projects. People have been delaying big renovations. They've been skipping big purchases like countertops, cabinets, flooring. But even with all of this, Home Depot this week says the consumer is, quote, "healthy" and signaling sort of better days are not too far.

HORSLEY: You know, home improvement stores in general tend to rise and fall with the broader housing market. And we know that housing market's been in a slump because home mortgages are so expensive. Now, home sales did pick up a little bit in January, and they're expected to rebound more as mortgage rates come down this year. Mortgage rates have actually inched up, though, in the last couple of weeks. Right now they're just under 7% - not as high as we saw last fall when rates got up close to 8% but still high enough to keep a lot of would-be home buyers on the sidelines.

SIMON: Alina, many signs shoppers are losing their patience.

SELYUKH: I think a lot of people already have. Actually, what's interesting is we are starting to see that companies are noticing it, and they have been starting to change tone. They're saying on prices, you know, maybe we've hit the edge of how much we can charge.

HORSLEY: For a long time, companies were able to raise prices at will. And even though shoppers would grumble, they would keep buying. Now companies say they have to think twice about raising prices because they start to lose business when they do. I know when the price of Diet Pepsi got high enough, I switched over to Safeway store brand.

SELYUKH: And I'm actually the other example, where I keep seeing the price go up, but I keep buying Coca-Cola, Scott. And so Coca-Cola says it's still making more money because many people like me are willing to pay higher prices. But now Pepsi, for example, is selling fewer Pepsi products. We've heard the same from Hershey and Kraft Heinz. They're saying, we're selling less stuff because people are resisting higher prices. They are still making more money, but they're selling less. And so what I'm watching for now is how companies might keep shifting this narrative more toward deflation, talking more about discounts and lower prices.

SIMON: And to make this a real NPR interview, I've got to note, we have two contrasting viewpoints here...


SIMON: ...OK? We have a Coke drinker and a recovering Pepsi drinker. What are the political implications of what you're discovering?

HORSLEY: (Laughter) Well, we probably have a few more months for people to sort through all the pluses and minuses and figure out what they think about this economy before they lock in their attitudes ahead of the November election. If you're President Biden, you hope economic sentiment continues to improve. If you're Donald Trump, you probably want to play up people's dissatisfactions.

SIMON: NPR's Scott Horsley and Alina Selyukh. Thanks so much for being with us.

SELYUKH: Thank you.

HORSLEY: Good to be with you. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Scott Simon is one of America's most admired writers and broadcasters. He is the host of Weekend Edition Saturday and is one of the hosts of NPR's morning news podcast Up First. He has reported from all fifty states, five continents, and ten wars, from El Salvador to Sarajevo to Afghanistan and Iraq. His books have chronicled character and characters, in war and peace, sports and art, tragedy and comedy.
Alina Selyukh is a business correspondent at NPR, where she follows the path of the retail and tech industries, tracking how America's biggest companies are influencing the way we spend our time, money, and energy.
Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.