WEBVTT - Anna Wong: Empty Shelves Are Coming Soon 0:00:02.480 --> 0:00:14.000 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:18.160 --> 0:00:21.919 Hello and welcome to another episode of the Odd Lots podcast. 0:00:22.040 --> 0:00:24.440 I'm Joe Wisenthal and I'm Tracy Allaway. 0:00:24.640 --> 0:00:28.240 Tracy the number. One of the main things I'm watching 0:00:28.320 --> 0:00:32.920 right now are those container shipping numbers that, at least 0:00:32.960 --> 0:00:35.559 looking out at the next few weeks, it looks like 0:00:35.680 --> 0:00:38.600 lots of actual orders are being canceled and there's the 0:00:38.720 --> 0:00:43.920 risk of material shortage of things from China emerging in 0:00:44.000 --> 0:00:45.279 a fairly short period of time. 0:00:45.560 --> 0:00:48.080 Yeah, I think we're kind of getting to the rubber 0:00:48.200 --> 0:00:52.360 meets the road portion of the tariffs, right. So everyone 0:00:52.440 --> 0:00:54.440 was talking about the potential of some sort of trade 0:00:54.480 --> 0:00:57.440 restrictions going into this year because we knew that Trump 0:00:57.520 --> 0:00:59.440 had won the election and he wanted to do some 0:00:59.480 --> 0:01:02.240 of the stuff. And so what we saw broadly for 0:01:02.320 --> 0:01:04.720 the first quarter was people trying to get ahead of that, 0:01:04.880 --> 0:01:08.800 so building up their inventories, ordering a bunch of stuff 0:01:09.000 --> 0:01:11.720 before some of those restrictions were expected to get in. 0:01:12.160 --> 0:01:14.880 But of course that can only last so long. And 0:01:15.280 --> 0:01:19.600 on Liberation Day, April second, Trump unveiled these really quite sweeping, 0:01:19.680 --> 0:01:22.200 quite dramatic tariffs, as we all know by now, Yes, 0:01:22.360 --> 0:01:25.640 and so I think people are starting to get concerned 0:01:25.680 --> 0:01:28.680 that like now is when we're really going to begin 0:01:28.760 --> 0:01:30.039 to see some of that impact. 0:01:30.240 --> 0:01:30.640 That's right. 0:01:30.680 --> 0:01:33.639 So, by the way we are recording this April twenty third, 0:01:33.880 --> 0:01:37.760 it's two to thirty six pm. Yesterday we got a 0:01:37.800 --> 0:01:40.360 little bit of softening and Trump saying, oh, it's not 0:01:40.360 --> 0:01:42.440 gonna be one hundred and forty five. But then today 0:01:43.000 --> 0:01:44.800 we got stuff there's like, there's not going to be 0:01:44.880 --> 0:01:48.040 any unilateral concessions. We don't really know. There has been 0:01:48.040 --> 0:01:51.360 this little softening of the tone. But look, one point 0:01:51.440 --> 0:01:55.160 of tariffs is to reduce a reliance on China, to 0:01:55.800 --> 0:01:59.040 partially decouple, et cetera. But then when you look at 0:01:59.040 --> 0:02:01.960 the reality of okay, well that's what we're doing. We're decoupling, 0:02:02.000 --> 0:02:05.600 we're buying less, it looks like it's coming very sharp 0:02:05.720 --> 0:02:08.200 and fast, and perhaps to a degree that it's not 0:02:08.320 --> 0:02:11.400 even really about inflation per se. Right, because I'll let 0:02:11.440 --> 0:02:12.799 you know, a year ago people were talking about this 0:02:12.840 --> 0:02:15.720 in the abstract, what does the fedgod do inflation? People 0:02:15.720 --> 0:02:17.520 are talking about empty shelves of a lot of things. 0:02:17.880 --> 0:02:20.280 Well, I think this is still a big question, Like 0:02:20.639 --> 0:02:22.400 I think there is some of this that could be 0:02:22.480 --> 0:02:25.880 attenuated by companies just choosing to raise their prices and 0:02:25.960 --> 0:02:29.440 maybe not order as many different types of things. But yeah, 0:02:29.560 --> 0:02:32.160 we are seeing some analysts start to talk about the 0:02:32.200 --> 0:02:35.720 possibility of empty shelves, and in fact, we're going. 0:02:35.560 --> 0:02:37.680 To speak to one now, that's right, we have the 0:02:37.720 --> 0:02:40.040 perfect guest. We are going to be speaking with Anna Wong. 0:02:40.160 --> 0:02:44.320 She is our chief US economist at Bloomberg Economics. Thank 0:02:44.360 --> 0:02:48.040 you for joining us. Anna, you tweeted about empty shelves 0:02:48.919 --> 0:02:51.320 in the sort of imminent term. What is the data 0:02:51.360 --> 0:02:54.359 you're looking at and when would you expect to see 0:02:54.600 --> 0:02:56.560 start people really start noticing it. 0:02:57.000 --> 0:03:01.400 Yeah, so and Tracy happy to be here again. So so, 0:03:02.040 --> 0:03:06.320 you know, many people have been talking about how based 0:03:06.320 --> 0:03:10.040 on the cancelation shipment and right now we have, as 0:03:10.080 --> 0:03:15.799 you mentioned, we have seen plummeting container bookings, and already 0:03:16.000 --> 0:03:19.320 in April, the first two weeks of April, we have 0:03:19.440 --> 0:03:25.640 seen weekly imports data from China to US, even from 0:03:25.760 --> 0:03:31.959 South Korea to US dropping very quickly. And and typically 0:03:32.360 --> 0:03:38.360 when we think about holidays season retail, which is which 0:03:38.440 --> 0:03:43.760 starts really with Halloween, uh in October, the US company 0:03:43.840 --> 0:03:47.560 should be planning right now, right usually they plan uh 0:03:47.640 --> 0:03:50.560 in the spring and they and then they start putting 0:03:50.560 --> 0:03:55.040 in the orders now, especially for items like toys and 0:03:55.080 --> 0:04:00.760 apparels and electronics longle time and so in in in 0:04:00.800 --> 0:04:06.520 the summer, basically throughout June, July, August is when China 0:04:06.520 --> 0:04:10.600 should be shipping these things to us. So we are 0:04:10.720 --> 0:04:14.560 right in this period where all this planning has to happen. 0:04:14.680 --> 0:04:20.120 Yet this is also when tariffs are implemented. So as 0:04:20.160 --> 0:04:27.120 a result, the basically the inventory for Christmas, for Halloween 0:04:27.400 --> 0:04:31.520 is already being disrupted right now. So even though it's 0:04:31.839 --> 0:04:36.160 still many months away, and you know, with the ninety 0:04:36.279 --> 0:04:40.520 day delay on the reciprocal tariffs, we are not you know, 0:04:41.000 --> 0:04:45.480 it's not until July ninth where we have US firms 0:04:45.520 --> 0:04:50.120 have better clarity on whether these tariffs fees of the 0:04:50.240 --> 0:04:54.760 other country would be raised. And so basically it exactly 0:04:54.839 --> 0:04:58.719 fell on this planning and shipping and producing period for 0:04:58.839 --> 0:05:02.880 holiday season. So I think this is one reason why 0:05:03.120 --> 0:05:06.040 just based on the high frequency data we have on 0:05:06.560 --> 0:05:10.039 the volumes, on the quantities, the dropping of it, and 0:05:10.360 --> 0:05:15.440 also just the you know, the timing of this this period, 0:05:15.520 --> 0:05:18.760 it suggests that there's a high probability that we may 0:05:18.800 --> 0:05:22.760 be seeing some empty shells in the holiday season, and 0:05:22.800 --> 0:05:29.440 even with less varieties, I consider I basically consider that 0:05:29.640 --> 0:05:33.040 part of the empty shelves just having less varieties. 0:05:34.040 --> 0:05:37.359 So talk to us about prices here, because you know, 0:05:37.480 --> 0:05:40.160 I sort of mentioned in the intro that one thing 0:05:40.200 --> 0:05:43.440 you could do if you're a retailer who isn't importing 0:05:43.560 --> 0:05:46.280 as much as you used to, you could just raise 0:05:46.279 --> 0:05:49.600 your prices massively, right in order to try to offset 0:05:49.720 --> 0:05:52.479 some of the loss of supply. So this kind of 0:05:52.480 --> 0:05:55.080 goes back to the old price over volume theme that 0:05:55.120 --> 0:05:58.839 we saw during the COVID pandemic. Is that an option 0:05:59.040 --> 0:06:01.200 here or is it the case that you think the 0:06:01.320 --> 0:06:04.880 uncertainty is so high that people just aren't ordering pretty 0:06:04.960 --> 0:06:05.520 much anything. 0:06:07.120 --> 0:06:09.880 Yeah, So we can look at some of the data, 0:06:09.880 --> 0:06:13.800 because we already have data up to March for impro 0:06:13.880 --> 0:06:19.719 prices PPI and CPI, and that covers basically two months 0:06:19.760 --> 0:06:24.119 of the trade war, where US raise tariffs on China 0:06:24.120 --> 0:06:27.880 by ten percent in February and then another ten percent 0:06:28.400 --> 0:06:31.719 in March. That's already many times larger than in the 0:06:31.760 --> 0:06:34.440 first trade war. So what we are seeing in the 0:06:34.920 --> 0:06:39.120 in prices so far indicate that number one, most of 0:06:39.160 --> 0:06:44.520 the Chinese tariffs have indeed been fully born by on 0:06:44.560 --> 0:06:49.520 the US side, by you know whoever. But just we 0:06:49.560 --> 0:06:53.640 can see that it's mostly one hundred percent passed through 0:06:53.880 --> 0:06:57.240 at the border to US importers. This is with two 0:06:57.279 --> 0:07:01.320 months of data. And second look at PPI data. This 0:07:01.400 --> 0:07:04.880 is the next stage. Right once the US importers bring 0:07:05.000 --> 0:07:10.840 in those products, they sell those products to intermediate firms 0:07:10.960 --> 0:07:16.080 or even to know wholesale firms, to distributors. So the 0:07:16.080 --> 0:07:19.480 next stage is looking at PPI. And we also have 0:07:19.720 --> 0:07:26.600 seen a positive correlation between tariff shots across products in 0:07:26.720 --> 0:07:32.160 February and March versus PPI increase in March. So there 0:07:32.240 --> 0:07:39.000 is also some small pass through to PPI prices, but 0:07:39.120 --> 0:07:44.840 not one hundred percent. So finally from PPI to CPI, 0:07:44.920 --> 0:07:49.800 there you still have that big segment of wholesaler distributors 0:07:50.280 --> 0:07:54.560 and this is where that passed through broke down. We 0:07:54.680 --> 0:07:58.400 have not seen much evidence yet that it's showing up 0:07:58.560 --> 0:08:02.240 in consumer prices. And in fact, if you plot a 0:08:02.320 --> 0:08:06.200 similar scatter plot where you have on the vertical axis 0:08:06.440 --> 0:08:11.480 the CPI change in March versus on the x axis 0:08:11.520 --> 0:08:15.520 the tariff increased by product, you actually would see negative 0:08:15.560 --> 0:08:19.840 correlation and meaning that the more China exposed it is 0:08:19.880 --> 0:08:23.120 to that to in that good is actually the more 0:08:23.160 --> 0:08:27.080 deflation you've seen. And we have seen that negative correlation 0:08:27.480 --> 0:08:30.760 held over the last three months as well as for 0:08:30.920 --> 0:08:34.520 most of last year, which suggests that there is actually 0:08:34.520 --> 0:08:39.320 another major part to this whole trade war price pass 0:08:39.360 --> 0:08:43.440 through story, which is China is going through a deflationary spiral, 0:08:43.840 --> 0:08:47.880 and domestic prices in China is very very competitive right now. 0:08:48.800 --> 0:08:52.839 So that's one element, and I think broadly these three 0:08:53.360 --> 0:08:57.679 type of prices is consistent with what we are seeing 0:08:57.720 --> 0:09:01.079 also in soft data, so in recent in recent days, 0:09:01.080 --> 0:09:05.920 we have seen from Richmond FED, Philly FED, and various 0:09:06.040 --> 0:09:12.480 manufacturing survey data that shows price paid have surged, yet 0:09:13.040 --> 0:09:17.120 price received, even though it also has increased, has not 0:09:17.320 --> 0:09:22.800 increased even to the amount of the price paid, which 0:09:22.840 --> 0:09:26.800 suggests that a lot of the at least up to March, 0:09:27.120 --> 0:09:30.480 the evidence is that much of the tariffs number one 0:09:30.960 --> 0:09:34.120 has been born by the US side number two have 0:09:34.280 --> 0:09:37.680 been absorbed through a compression of profit margins. 0:09:38.440 --> 0:09:41.560 Yeah, I think this is really important and also basically 0:09:41.600 --> 0:09:44.000 the big question here is how much of that cost 0:09:44.120 --> 0:09:47.240 passed through actually makes it down to consumers. And I'm 0:09:47.240 --> 0:09:50.400 so glad Anna brought up the wholesalers because they're sort 0:09:50.400 --> 0:09:54.800 of the forgotten, the forgotten element of price passed through 0:09:55.000 --> 0:09:57.160 in all of this. And obviously they have their own 0:09:57.200 --> 0:10:00.880 profit margins to worry about, but if they all absorbing 0:10:01.040 --> 0:10:03.560 potentially some of the costs, and that does add a 0:10:03.559 --> 0:10:06.080 sort of extra cushion on for consumers. 0:10:06.120 --> 0:10:09.599 By the way, yesterday April twenty second, in the newsletter, 0:10:09.679 --> 0:10:13.640 I spotlighted this gap between prices received and prices paid 0:10:13.679 --> 0:10:16.640 in some of those regional FED surveys, and Tracy was 0:10:16.760 --> 0:10:19.080 kind enough to draw teeth on it to make it 0:10:19.120 --> 0:10:21.360 look like the jaws of death that are coming for 0:10:21.440 --> 0:10:25.520 your profit margins. And Okay, maybe the prices don't get 0:10:25.559 --> 0:10:29.760 passed on to consumers fully, or maybe it's just partially 0:10:29.880 --> 0:10:33.560 prices received just go up a lot. Tracy described it 0:10:33.640 --> 0:10:38.600 as cushion. But what does economics tell us about when 0:10:38.679 --> 0:10:43.280 profit margins get clobbered to profit margins go negative? What 0:10:43.360 --> 0:10:46.040 does that do to the impulse for investment in hiring 0:10:46.160 --> 0:10:47.640 and then the possibility of layoffs? 0:10:49.080 --> 0:10:53.640 Yeah, exactly, that is the key question. And when profit 0:10:53.720 --> 0:10:58.439 margins are squeezed, it means the primary burden of adjustment 0:10:58.520 --> 0:11:03.800 to tariffs fall on stock prices and also on unemployment 0:11:04.120 --> 0:11:11.000 and capex. So we're expecting investment to significantly slow down 0:11:11.320 --> 0:11:14.120 in the second half of this year and responds to 0:11:14.240 --> 0:11:20.600 lower profit. Right, everything on the investment side respond to profits, right, 0:11:21.520 --> 0:11:28.600 And also then ultimately on employment and real wages will adjust. 0:11:28.640 --> 0:11:32.840 So on employment we are expecting it to go up 0:11:32.920 --> 0:11:34.720 to four point eight percent by the end of this 0:11:34.840 --> 0:11:38.200 year and peaking at five point three percent next year, 0:11:38.720 --> 0:11:42.959 and real wages will fall. And you know services sector 0:11:43.240 --> 0:11:48.960 account for about two thirds of the core PCE basket. 0:11:49.440 --> 0:11:53.000 And so when you think about how you know, at 0:11:53.040 --> 0:11:55.360 the end of the day, maybe a year from now, 0:11:55.600 --> 0:11:59.880 what we will see is that there's basically a reality 0:12:00.320 --> 0:12:04.680 between prices, right, so goods prices probably will be higher 0:12:05.160 --> 0:12:08.319 on a level basis, but at the same time, real wages, 0:12:08.440 --> 0:12:13.720 which drives services costs, will come down significantly. And you know, 0:12:13.840 --> 0:12:18.720 some of the most demand elastic sectors in the economy 0:12:19.200 --> 0:12:24.720 are travel related and with elasticity of demand that's higher 0:12:24.760 --> 0:12:28.040 than one, and also to income as well, to income 0:12:28.080 --> 0:12:31.559 that's higher than one. That means that when the economy 0:12:31.600 --> 0:12:34.880 slows down, we should be seeing a lot of disinflationary 0:12:34.920 --> 0:12:39.240 pressure coming from the services sector, and in fact, I 0:12:39.280 --> 0:12:42.360 think we already have seen some early clues of that 0:12:42.400 --> 0:12:48.440 in the March CPI report. Hotels, car rentals, airfares have 0:12:48.559 --> 0:12:53.679 all been plummeting, seeing deflation actually in March, and even 0:12:53.720 --> 0:12:56.200 in the Sep. Five hundred you see that it's the 0:12:56.280 --> 0:12:59.600 airlines stock prices that have been hit the hardest because 0:12:59.640 --> 0:13:03.160 that's where the discretionary spending will be pulling back. 0:13:19.000 --> 0:13:21.839 Let me just ask one question. One of the frustrations 0:13:21.840 --> 0:13:25.040 that pretty much everyone operating in the economy right now 0:13:25.200 --> 0:13:28.520 seems to have, including podcasters, by the way, is there 0:13:28.559 --> 0:13:31.160 is so much uncertainty and the headlines are coming out 0:13:31.360 --> 0:13:34.199 fast and furiously, it's really hard to keep up. And 0:13:34.280 --> 0:13:36.880 you know, even if we get this episode out in 0:13:36.920 --> 0:13:39.280 the next one or two days, we don't know if 0:13:39.320 --> 0:13:42.680 the Trump administration is going to announce something completely different 0:13:42.720 --> 0:13:46.320 when it comes to tariffs. How hard or easy will 0:13:46.320 --> 0:13:50.360 it be to actually start to rebuild inventories if we 0:13:50.360 --> 0:13:54.480 were to get some certainty on the Yeah, on the 0:13:54.559 --> 0:13:55.320 Terroff question. 0:13:55.720 --> 0:13:59.360 Going back to the planning for a holiday season, right, so, 0:13:59.559 --> 0:14:04.199 firms should be planning now for if they want goods 0:14:04.200 --> 0:14:07.520 to be on the shelf in October, so it takes 0:14:07.880 --> 0:14:11.560 at least six months for the whole planning to take place. 0:14:11.720 --> 0:14:16.040 But does anybody have enough certainty about six you know, 0:14:16.160 --> 0:14:21.000 and even in thirty days time to know to to 0:14:21.360 --> 0:14:25.480 be ready to potentially get hit by tariffs. So an 0:14:25.520 --> 0:14:29.040 example is what we have seen in February March in 0:14:29.120 --> 0:14:32.400 the import price data and mentioned that almost one hundred 0:14:32.440 --> 0:14:35.400 percent of the tariffs on China has been passed through 0:14:35.400 --> 0:14:39.400 through the US border. And the thing is it's because 0:14:39.520 --> 0:14:43.560 most of those goods had been entransit already before these 0:14:43.600 --> 0:14:46.880 tariffs were even on the horizon, so they were already 0:14:47.040 --> 0:14:50.240 en route in January, so there was no time to 0:14:50.280 --> 0:14:55.560 discuss between the import and exporter how to share the burden. So, 0:14:55.960 --> 0:15:00.400 for if the US firm is thinking about restore stocking, 0:15:00.720 --> 0:15:03.680 suppose that they have enough stock to last them until 0:15:03.760 --> 0:15:06.280 June based on the front running we have seen in 0:15:06.320 --> 0:15:09.360 the imports data so far, so they have enough until 0:15:09.400 --> 0:15:12.600 June and now they're planning. Should they start to uh 0:15:12.840 --> 0:15:17.880 plan for restocking beyond June, then they need to basically 0:15:17.960 --> 0:15:21.800 think like a risk neutral agent. So in economics, when 0:15:22.080 --> 0:15:24.720 one is you know, In these models, when we think 0:15:24.760 --> 0:15:29.600 about how does a person make a decision rational decision 0:15:30.040 --> 0:15:34.000 in the phase of uncertainty, you calculate the risk neutral 0:15:34.200 --> 0:15:37.400 you know, optimization equation. So it would be you know, 0:15:37.480 --> 0:15:41.280 a probability of the scenario on the tariff multiplied by 0:15:41.280 --> 0:15:44.680 the net cost UH and then plus you know different 0:15:45.000 --> 0:15:49.480 probability of scenarios. So right now we have seen that 0:15:49.600 --> 0:15:52.760 tariffs on China is you know, over well over one 0:15:52.800 --> 0:15:57.960 hundred percent, and because of that extremely high cost to 0:15:58.240 --> 0:16:03.920 that tail outcome, like suppose that there were further escalation 0:16:04.080 --> 0:16:06.280 between you as a China and now you know that 0:16:06.360 --> 0:16:11.160 the probability of tariff on China could potentially even go 0:16:11.240 --> 0:16:13.480 to two hundred percent if you know, I'm not saying 0:16:13.520 --> 0:16:16.480 that will happen, but it seems like quite plausible. Now 0:16:16.520 --> 0:16:20.720 anything could happen. So in that case, your loss in 0:16:20.800 --> 0:16:24.520 this you're trying to minimize this loss function, and then 0:16:24.560 --> 0:16:27.080 you have a massive loss. This is why we are 0:16:27.160 --> 0:16:32.160 seeing cancelation of orders. It's because in the risk neutral optimization, 0:16:33.000 --> 0:16:37.800 given these high risk outcome, it doesn't make sense for 0:16:37.920 --> 0:16:41.320 you to actually take the risk of potentially you know, 0:16:41.480 --> 0:16:44.040 having the good arrived at the border only to find 0:16:44.080 --> 0:16:47.280 out that, oh, you are two hundred percent of the tariffs. 0:16:47.520 --> 0:16:50.200 And this is why there's it's a high probability that, 0:16:50.560 --> 0:16:54.120 given the uncertainty and the time it takes to plan 0:16:54.320 --> 0:16:57.160 for the goods to be on the shelf in the fall, 0:16:57.280 --> 0:17:00.120 that I think is the high high probability outcome that 0:17:00.160 --> 0:17:04.879 we all have all empty shells and lack of varieties. 0:17:05.240 --> 0:17:08.200 I just have one last question. You know, we're in 0:17:08.280 --> 0:17:11.720 this sort of weird space where you know, we see 0:17:11.720 --> 0:17:13.879 what's on the screen, and we see the surveys and 0:17:13.920 --> 0:17:15.960 all that, but day to day life when I go 0:17:16.040 --> 0:17:19.040 to the store is like pretty normal. And you know, 0:17:19.160 --> 0:17:21.199 like we said, we haven't seen to pick up in 0:17:21.280 --> 0:17:24.840 the layoffs data yet, even though everyone is anticipating all 0:17:24.840 --> 0:17:27.280 the surveys are dismal. But you know, I think for most, 0:17:27.640 --> 0:17:30.439 you know, the three of us anyway, buy and large 0:17:30.760 --> 0:17:33.919 life goes on. Although Tracy has received emails from various 0:17:33.960 --> 0:17:36.120 companies that she buys from. 0:17:36.160 --> 0:17:38.040 One of the things I'm learning in all of this 0:17:38.240 --> 0:17:40.320 is that I am on a lot of mailing us 0:17:40.640 --> 0:17:43.239 for random stuff. So I've gotten an email from a 0:17:43.440 --> 0:17:47.000 company that sells fake flowers saying that their prices are 0:17:47.000 --> 0:17:48.679 probably going to go up because so much of it 0:17:48.760 --> 0:17:51.199 is made in China. I've gotten an email from a 0:17:51.280 --> 0:17:54.720 provider of a home battery storage system because I was 0:17:54.760 --> 0:17:57.400 kind of interested in that, saying that prices we're also 0:17:57.440 --> 0:17:59.720 going to go up. So we'll see, we'll see what else. 0:18:00.000 --> 0:18:03.159 One thing about fake flowers, by the way, is that 0:18:03.240 --> 0:18:06.600 was one of Hong Kong's very first export industries was 0:18:06.640 --> 0:18:09.359 that they really they like current, they really like Yeah 0:18:09.400 --> 0:18:11.280 they did. That was a huge you know. Then they 0:18:11.320 --> 0:18:14.920 eventually did high tech things, but fake flowers was an 0:18:14.920 --> 0:18:17.600 early uh it was an early industry. They came to 0:18:17.640 --> 0:18:18.280 dominate this. 0:18:18.560 --> 0:18:20.879 And one of those random oh yes, Joe, and in 0:18:20.920 --> 0:18:23.119 fact it was the bread and butter of the richest 0:18:23.160 --> 0:18:28.200 man in Hong kongly couching has uh got has start 0:18:28.320 --> 0:18:30.040 with making plastic flowers. 0:18:30.400 --> 0:18:31.240 This is so great. 0:18:31.320 --> 0:18:34.520 I like have this random random fact stuck in my 0:18:34.600 --> 0:18:38.159 head and you know, I don't know how you remember that. 0:18:38.240 --> 0:18:40.879 And then you were able to the alip there between 0:18:40.880 --> 0:18:44.920 me and a real quickly holiday season potentially very damage. 0:18:45.200 --> 0:18:47.000 But when do you would you say, we start to 0:18:47.040 --> 0:18:49.400 see this in sort of either our day to day 0:18:49.400 --> 0:18:52.119 lives or at least in hard data, Well, I. 0:18:52.600 --> 0:18:57.320 Think anecdotally it's already these stories are filtering in. I mean, 0:18:57.480 --> 0:19:02.119 for anyone who will be having a broken AC system, 0:19:02.320 --> 0:19:07.960 especially a central AC system, and comes summer, you'll find 0:19:08.000 --> 0:19:11.000 that many of the parts are actually came from China, 0:19:11.160 --> 0:19:15.600 only manufactured in China, and your service company will tell 0:19:15.640 --> 0:19:17.800 you if they can't do nothing about it because nobody 0:19:17.880 --> 0:19:20.639 is importing any of those parts. And you know there 0:19:20.640 --> 0:19:22.640 will be more and more stories like that. In terms 0:19:22.720 --> 0:19:26.320 of the hard data, I think in the April, meaning 0:19:27.160 --> 0:19:31.240 next month, we will get the April's import volume data, 0:19:31.400 --> 0:19:34.160 which for the whole month, and it will be clear 0:19:34.359 --> 0:19:39.600 that the volume is already declining very quickly. And I 0:19:39.680 --> 0:19:43.720 would I think for now, for people who collect big 0:19:43.840 --> 0:19:50.200 data so web scraping, I think one could be scraping. 0:19:50.440 --> 0:19:54.240 You know. You know how on Amazon it actually lists 0:19:54.480 --> 0:19:58.040 how many of these items are remaining, Like it tells 0:19:58.080 --> 0:20:02.440 you like three more left, more left. Start paying attention 0:20:02.600 --> 0:20:05.120 to that, and you see that those three more left, 0:20:05.240 --> 0:20:08.320 two more left is dwindling without increasing. 0:20:08.760 --> 0:20:12.280 Anna, You're going to add to my already innate tendency 0:20:12.400 --> 0:20:16.400 to stockpile things. Thank you for the advice. 0:20:16.320 --> 0:20:19.199 Anna, think I'm sure you're as busy as we are, 0:20:19.359 --> 0:20:22.000 updating models every day with every new headline. Thank you 0:20:22.080 --> 0:20:41.399 so much for coming on odd Lote, No problem, Tracy, 0:20:41.480 --> 0:20:44.040 that was unnerving. You know, this didn't actually come up. 0:20:44.160 --> 0:20:46.200 But one of the things I've been thinking about is 0:20:46.840 --> 0:20:49.760 the disparate impact that this will have on small versus 0:20:49.800 --> 0:20:52.560 big businesses, because like a really big business, you know, 0:20:52.600 --> 0:20:55.159 they can you know, could lose money right for a 0:20:55.240 --> 0:20:58.159 quarter or two and go be you know, continue for 0:20:58.160 --> 0:21:01.080 a while. As a going there are going to be 0:21:01.080 --> 0:21:05.280 small businesses that literally just cannot pay that tariff bill 0:21:05.359 --> 0:21:06.560 and that's lights out for them. 0:21:06.640 --> 0:21:06.840 Yeah. 0:21:06.840 --> 0:21:08.639 I think I wrote about this in the newsletter a 0:21:08.640 --> 0:21:11.520 few weeks ago, but that seems almost certain to happen. 0:21:11.600 --> 0:21:14.239 And also, you know, the bigger businesses obviously do have 0:21:14.280 --> 0:21:17.960 some pricing power. They might have some ability to negotiate 0:21:18.200 --> 0:21:21.200 with their suppliers, like I think Walmart is already trying 0:21:21.240 --> 0:21:23.560 to do that with China at the moment. So yeah, 0:21:23.600 --> 0:21:26.639 the scales seem very very much tipped in favor of 0:21:26.760 --> 0:21:29.639 the big guys over at the small it is. It 0:21:29.720 --> 0:21:32.320 is also very unsettling just to think that all of 0:21:32.320 --> 0:21:36.080 this is by choice, right, Yeah, like this is a 0:21:36.080 --> 0:21:39.960 policy decision by the current administration. It almost seems like 0:21:40.200 --> 0:21:42.560 it was probably a bad time to do this, right 0:21:42.760 --> 0:21:46.560 in the spring planning season, right before the summer shipping 0:21:46.600 --> 0:21:51.840 season for the later retail buying season. Feels like this was, yeah, 0:21:52.000 --> 0:21:53.000 not a great time. 0:21:53.119 --> 0:21:55.760 Well, you know, I find it interesting that for years, 0:21:56.280 --> 0:21:59.600 since I was a teen, culture work the war on Christmas. 0:21:59.640 --> 0:22:01.840 This is a literal no for real, right that we've 0:22:01.840 --> 0:22:04.760 been hearing that forever, And Anna's talking about empty shelves 0:22:04.800 --> 0:22:05.560 over the holidays. 0:22:05.600 --> 0:22:06.160 What is that? 0:22:06.680 --> 0:22:10.840 It's they're winning the War on Christmas. I don't know. Like, well, 0:22:10.920 --> 0:22:13.240 on the plus side, I guess people have been complaining 0:22:13.240 --> 0:22:16.480 about American consumerism for a very long time. So here 0:22:16.520 --> 0:22:19.800 we go at exercise in austerity. Shall we leave it there? 0:22:20.080 --> 0:22:20.840 Let's leave it there. 0:22:21.040 --> 0:22:23.760 This has been another episode of the Authoughts podcast. I'm 0:22:23.760 --> 0:22:26.920 Tracy Alloway. You can follow me at Tracy Alloway. 0:22:26.600 --> 0:22:29.400 And I'm Joe Wisenthal. You can follow me at The Stalwart. 0:22:29.600 --> 0:22:33.480 Follow Anna Wong, She's at Anna Economist. Follow our producers 0:22:33.560 --> 0:22:36.960 Carman Rodriguez at Kerman Armann, dash O Bennett at Dashbot 0:22:36.960 --> 0:22:40.200 and kill Brooks at Kelbrooks. For our odd Laws content. 0:22:40.240 --> 0:22:42.520 Go to Bloomberg dot com slash odd Lots, where we 0:22:42.600 --> 0:22:45.880 have a daily newsletter and all of our episodes, and 0:22:46.000 --> 0:22:48.480 you can chat with fellow listeners twenty four to seven. 0:22:48.520 --> 0:22:50.879 What are you seeing out there in the real economy? 0:22:50.880 --> 0:22:53.280 What niches are you aware of the way Tracy is 0:22:53.320 --> 0:22:58.320 aware of artificial flowers? Chat with other listeners discord dot gg, 0:22:58.440 --> 0:22:59.840 slash odlines. 0:22:59.800 --> 0:23:02.000 If if you enjoy odd Lots, if you like it 0:23:02.200 --> 0:23:05.199 when we talk about what economists are seeing when it 0:23:05.240 --> 0:23:08.240 comes to the impact of tariffs, then please leave us 0:23:08.320 --> 0:23:11.719 a positive review on your favorite podcast platform. And remember, 0:23:11.760 --> 0:23:14.240 if you are a Bloomberg subscriber, you can listen to 0:23:14.400 --> 0:23:17.320 all of our episodes absolutely add free. All you need 0:23:17.359 --> 0:23:20.119 to do is find the Bloomberg channel on Apple Podcasts 0:23:20.119 --> 0:23:33.480 and follow the instructions there. Thanks for listening.