National

Axios Closer

Americans keep spending despite worrying about inflation.

Why it matters: It’s another sign that the underlying economy remains relatively strong even as fighting inflation is now President Biden's "top domestic priority."

Driving the news: Walmart, the biggest U.S. retailer by revenue, missed on quarterly earnings but beat expectations with sales and bumped its top-line forecast for the year.

Home Depot today also raised its outlook for the year as it reported its largest ever first-quarter sales.

Retail sales in the U.S. — which include online, stores and restaurants — grew 0.9% overall in April from March compared to a 0.3% rise in the Consumer Price Index, government data out today shows.

Year-over-year retail sales rose 8.2%, compared to an 8.3% rise in inflation.

What they’re saying: “Given this show of strength from consumers, speculation that the US economy is in danger of an imminent plunge into recession [looks] badly misplaced,” Paul Ashworth, Capital Economics’ chief North American economist, noted.

Yes, but: Higher costs — for both businesses and consumers — are taking their toll.

Walmart, for example, reported a nearly 25% drop in net income last quarter compared to last year due in part to rising fuel and food costs.

Credit card usage among consumers has been steadily rising this year and is expected to keep rising.

Of note: Fed chair Jerome Powell said today he wouldn't hesitate to keep raising rates until inflation comes down.

Meanwhile, both Walmart and Home Depot customers spent more in the quarter, but they didn't shop more.

Walmart reported a 3% increase in comparable sales for the quarter over last year, but the number of transactions was flat.

Home Depot actually saw transactions fall 8.2%.

Our thought bubble: Inflation's fingerprints are all over this. Rising prices likely helped push sales receipt values up as visits decreased.

What to watch: Target and Lowe’s report earnings tomorrow. 

Consumers continue to defy inflation

Retailers like Walmart and Home Depot expect sales to be better than expected this year.

Illustration of an antique couch sticking out of a shopping bag.

Inflation

Americans keep spending despite worrying about <a class="gtmContentClick" data-vars-link-text="inflation" data-vars-click-url="https://link.axios.com/click/27748373.92918/aHR0cHM6Ly93d3cuY2JzbmV3cy5jb20vbmV3cy9jYnMtbmV3cy1wb2xsLWluZmxhdGlvbi1vdXR3ZWlnaHMtam9icy1vbi1lY29ub21pYy12aWV3cy1wcmljZXMtZm9yY2UtY3V0YmFja3MvP3V0bV9zb3VyY2U9bmV3c2xldHRlciZ1dG1fbWVkaXVtPWVtYWlsJnV0bV9jYW1wYWlnbj1uZXdzbGV0dGVyX2F4aW9zY2xvc2VyJnN0cmVhbT10b3A/5ffe985a6c4b34267f3021cdB4a98065f" data-vars-content-id="114a2c9d-d0d0-4cde-9946-ec81c8bc8fc5" data-vars-headline="Consumers continue to defy inflation" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://link.axios.com/click/27748373.92918/aHR0cHM6Ly93d3cuY2JzbmV3cy5jb20vbmV3cy9jYnMtbmV3cy1wb2xsLWluZmxhdGlvbi1vdXR3ZWlnaHMtam9icy1vbi1lY29ub21pYy12aWV3cy1wcmljZXMtZm9yY2UtY3V0YmFja3MvP3V0bV9zb3VyY2U9bmV3c2xldHRlciZ1dG1fbWVkaXVtPWVtYWlsJnV0bV9jYW1wYWlnbj1uZXdzbGV0dGVyX2F4aW9zY2xvc2VyJnN0cmVhbT10b3A/5ffe985a6c4b34267f3021cdB4a98065f" target="_blank">inflation</a>.Why it matters: It’s another sign that the underlying economy remains relatively strong even as fighting inflation is now President Biden&#x27;s &quot;<a class="gtmContentClick" data-vars-link-text="top domestic priority" data-vars-click-url="https://link.axios.com/click/27748373.92918/aHR0cHM6Ly93d3cuYXhpb3MuY29tLzIwMjIvMDUvMTAvYmlkZW4taW5mbGF0aW9uLWRlbW9jcmF0cy1yZXB1YmxpY2Fucy0yMDIyP3V0bV9zb3VyY2U9bmV3c2xldHRlciZ1dG1fbWVkaXVtPWVtYWlsJnV0bV9jYW1wYWlnbj1uZXdzbGV0dGVyX2F4aW9zY2xvc2VyJnN0cmVhbT10b3A/5ffe985a6c4b34267f3021cdBd27855b8" data-vars-content-id="114a2c9d-d0d0-4cde-9946-ec81c8bc8fc5" data-vars-headline="Consumers continue to defy inflation" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://link.axios.com/click/27748373.92918/aHR0cHM6Ly93d3cuYXhpb3MuY29tLzIwMjIvMDUvMTAvYmlkZW4taW5mbGF0aW9uLWRlbW9jcmF0cy1yZXB1YmxpY2Fucy0yMDIyP3V0bV9zb3VyY2U9bmV3c2xldHRlciZ1dG1fbWVkaXVtPWVtYWlsJnV0bV9jYW1wYWlnbj1uZXdzbGV0dGVyX2F4aW9zY2xvc2VyJnN0cmVhbT10b3A/5ffe985a6c4b34267f3021cdBd27855b8" target="_blank">top domestic priority</a>.&quot;

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

Target says it will continue to resist raising prices despite seeing its own costs balloon.

Why it matters: Companies are all trying to find their sweet spot with consumers when it comes to moving up prices. Retailers are seeing buyers start to pull away when prices on some of the lowest priced items are hiked, while services businesses like restaurants and hotels are finding there’s still more room to pass along costs.

Driving the news: In an earnings call this morning, Target CFO Michael Fiddelke said, “while it’s always the last lever we pull, external conditions led us to raise prices across a broad set of items in multiple categories.”

By the numbers: Target reported a huge decline in net profits last quarter — 52% — due to higher costs from labor, mistimed inventory and inputs like fuel and freight.

The company reported its costs will also rise by an additional $1 billion this year, more than had been expected. 

The big picture: Target’s first quarter woes and results mirrored those of Walmart’s, which were published yesterday.

Shares of Target closed down 24.9% following today’s report, while Walmart’s stock saw its worst day yesterday since 1987, according to Reuters. 

What to watch: Target may be facing a tougher rest of the year than Walmart given it relies more on sales of discretionary products, Arun Sundaram, senior equity research analyst at CFRA, tells Axios. 

Target crushed by higher costs and weakening consumer demand

The company says it will continue to resist raising prices despite seeing its own costs balloon.

Retail

Target says it will continue to resist raising prices despite seeing its own costs balloon.Why it matters: Companies are all trying to find their sweet spot with consumers when it comes to moving up prices. Retailers are seeing buyers start to pull away when prices on some of the <a class="gtmContentClick" data-vars-link-text="lowest priced items are hiked" data-vars-click-url="https://www.wsj.com/podcasts/your-money-matters/pushing-back-on-inflation-some-shoppers-reject-higher-prices/b4177665-6215-406e-a80d-15e34bc4f6be" data-vars-content-id="5cffcbfc-711f-4276-a457-fe805f4a5057" data-vars-headline="Target crushed by higher costs and weakening consumer demand" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.wsj.com/podcasts/your-money-matters/pushing-back-on-inflation-some-shoppers-reject-higher-prices/b4177665-6215-406e-a80d-15e34bc4f6be" target="_blank">lowest priced items are hiked</a>, while services businesses like restaurants and hotels are finding there’s still <a class="gtmContentClick" data-vars-link-text="more room" data-vars-click-url="https://www.nytimes.com/2022/02/27/business/economy/price-increases-inflation.html" data-vars-content-id="5cffcbfc-711f-4276-a457-fe805f4a5057" data-vars-headline="Target crushed by higher costs and weakening consumer demand" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.nytimes.com/2022/02/27/business/economy/price-increases-inflation.html" target="_blank">more room</a> to pass along costs.

United Airlines CEO Scott Kirby rarely has a sleepless night, he said yesterday on the Edge observation deck, 1,100 feet above Manhattan.

Driving the news: Kirby and his team held a reception at the restaurant attached to the tourist attraction to celebrate the launch of United’s new ad campaign, “Good Leads The Way.”

Why it matters: The fact that airlines are advertising again is symbolic of the confidence they have, Helane Becker, a senior research analyst at Cowen, told me at the same event.

Flashback: Two years ago, Kirby — who was about to take the reins — and other airline CEOs were worried about the CARES Act passing, which allocated $25 billion to U.S. passenger airlines.

“[We] would have had to shut the airline down [without the funding],” he said. 

State of play: Airlines are in a completely different position now.

As demand for travel has surged, airfare prices have risen 33% as of April compared to the same period last year.

United said last month that it expects to make a profit this year for the first time since before the pandemic. 

Of note: During Monday’s event, Kirby addressed a crowd of employees, partners and media before playing the new ad spot.

“I actually told our board this year that I had the easiest job of anyone at United Airlines … because there’s really only one responsibility — which is to make our employees proud,” he said.

“When our employees are proud, and you’re on a flight, they want you to feel about the airline what they feel.”

The big picture: Our interview on the observation deck was cut short by wind and rain, but after the clouds parted, a rainbow appeared above the Empire State building just as a United plane flew above it.

That's just how it's going for airlines at the moment.

United Airlines turns a corner

In an interview with Axios, United Airlines CEO Scott Kirby reflects on the start of the pandemic.

man in suit on a small stage in front of microphone addressing a crowd of professionals

United Airlines CEO Scott Kirby in New York. Photo: Hope King/Axios

Airlines

United Airlines CEO Scott Kirby rarely has a sleepless night, he said yesterday on the <a class="gtmContentClick" data-vars-link-text="Edge observation deck" data-vars-click-url="https://newyorkyimby.com/2020/03/the-edge-at-30-hudson-yards-officially-opens-to-the-public-in-hudson-yards.html" data-vars-content-id="5f96ce38-93d3-43c0-928d-111121b9aed0" data-vars-headline="United Airlines turns a corner" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://newyorkyimby.com/2020/03/the-edge-at-30-hudson-yards-officially-opens-to-the-public-in-hudson-yards.html" target="_blank">Edge observation deck</a>, 1,100 feet above Manhattan.Driving the news: Kirby and his team held a reception at the restaurant attached to the tourist attraction to celebrate the launch of United’s new <a class="gtmContentClick" data-vars-link-text="ad campaign" data-vars-click-url="https://skift.com/blog/united-launches-new-ad-campaign-showing-off-its-pandemic-earned-goodwill/" data-vars-content-id="5f96ce38-93d3-43c0-928d-111121b9aed0" data-vars-headline="United Airlines turns a corner" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://skift.com/blog/united-launches-new-ad-campaign-showing-off-its-pandemic-earned-goodwill/" target="_blank">ad campaign</a>, “Good Leads The Way.”

Data: WakeField via iCIMS Class of COVID-19 report; Chart: Jacque Schrag/Axios

Younger workers, in the aftermath of the pandemic, are craving a more traditional work experience with employers who accept them for who they are.

Why it matters: Companies across industries are trying to figure out the right way to meet employees' new needs — such as hybrid work requirements and benefits — amid a labor market that still favors workers.

State of play: Among recent grads, mental health support is the top career expectation, according to a new survey of 1,000 young adults from iCIMS, a talent acquisition software provider.

91% of those surveyed (class of 2020, 2021 or 2021 undergrads) said they care how long they stay with an employer.

Nearly 70% say they actually see themselves staying long term. 

The big picture: The upheaval that graduating college students have lived through over the past three years has changed their perspective on what they want and need. 

“Stability is key for them,” Rhea Moss, director of data insights and customer intelligence at iCIMS, tells Axios.

What to watch: Younger workers are diligent about researching the companies they work for as well as their potential managers, according to the study.

"[This generation] is being very particular about the company they'd want to work for where they feel that they can bring their whole, true self to work," says Moss.

Gen Z workers crave career stability

They're looking for a more traditional work experience where they can bring their "true self."

Labor

Younger workers, in the aftermath of the pandemic, are craving a more traditional work experience with employers who accept them for who they are.Why it matters: Companies across industries are trying to figure out the right way to meet employees&#x27; new needs — such as hybrid work requirements and benefits — amid a labor market that still favors workers.

Oishii, the company behind the $6 strawberry, is cutting prices by more than half as it opens a large indoor vertical farm, the company announced Thursday.

A tray of 11 medium berries or eight large berries will cost $20 instead of $50.

The big picture: Demand for the gourmet berries is high, as are other pricey, made for Instagram fruits like Cotton Candy grapes or Sumo Citrus mandarins.

What they’re saying: "Yes, it's still $20, but our goal is to make this available to everyone — not just in New York — around the world," CEO and co-founder Hiroki Koga tells Axios.

What to watch: The company also announced that its products will be available at a new Whole Foods store opening in New York in a few weeks.

Company behind $6 strawberry cuts prices after opening indoor farm

The company is opening its largest vertical farm, which helps brings prices down.

Oishii, the company behind the $6 strawberry, is cutting prices by more than half as it opens a large indoor vertical farm, the company announced Thursday.<ul><li>A tray of 11 medium berries or eight large berries will cost $20 instead of $50.</li></ul>

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Stories

Company behind $6 strawberry cuts prices after opening indoor farm

Target crushed by higher costs and weakening consumer demand

Gen Z workers crave career stability

Consumers continue to defy inflation

United Airlines turns a corner