January retail sales sore and CBO projects higher unemployment : The Indicator from Planet Money Economic news of the week – from the government's new projections on unemployment and inflation to the latest retail spending numbers. Plus, what's the deal with companies retaliating against union organizers?

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Recession, retail, retaliation

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SYLVIE DOUGLIS, BYLINE: NPR.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

DARIAN WOODS, HOST:

This is THE INDICATOR FROM Planet Money. I'm Darian Woods. We're joined here by a very special guest all the way from Planet Money, Erika Beras. Welcome to the show.

ERIKA BERAS, BYLINE: Thank you. Thanks for having me on this planet.

WOODS: Good to have you. And we also have, of course, Wailin Wong.

WAILIN WONG, BYLINE: Hello.

WOODS: A regular.

WONG: (Laughter) That's me. I'm always here.

BERAS: (Laughter).

WOODS: What do we have for today's indicators of the week?

WONG: I've got a big batch of new projections from the Congressional Budget Office. That's your tax money at work, Darian.

WOODS: I love what they do. And, Erika...

BERAS: I, too, have some numbers. And it's about our super spendy (ph) January.

WOODS: OK. And I will be talking about Tesla and unions, two things that are kind of like oil and water. That's all after the break.

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WONG: So my indicator is 5.1%. It comes from a new report released this week by the Congressional Budget Office. You might remember this is a nonpartisan, federal agency that crunches numbers about the budget and the economy for Congress. And 5.1% is where the CBO sees the unemployment rate coming in at the end of this year.

WOODS: OK. So 5.1% is a big increase from where it is now, 3.4%.

WONG: It is, yeah. And the CBO's budget and economic outlook covers 10 years. It goes all the way out to 2033. So kind of mapping out what they see for unemployment, they see it going up to 5% at the end of this year and then starting to come back down next year but not quite to the very low levels we're seeing right now.

WOODS: I mean, that's actually millions of people losing their livelihoods. I mean, we can talk about these numbers in the abstract, but that's actually pretty grim reading.

WONG: Yeah. I mean, we've been talking a lot about the trade-off in the short term between inflation and employment. So as the Fed raises interest rates to slow down the economy and bring down inflation, the trade-off in the short term is that you can get higher unemployment.

BERAS: So what does the CBO have to say about inflation?

WONG: Well, the CBO does see inflation coming down, although it says it's not going to get close to the Fed's 2% inflation target until after next year.

WOODS: So 2025.

WONG: Potentially.

WOODS: That's a long way away.

WONG: I know. I know. When you put it that way, it sounds really grim. We're going to get higher unemployment, millions of people potentially out of work. Plus, inflation's not going to get close to 2% for a while.

WOODS: Well, thanks for the good news, CBO.

(LAUGHTER)

WONG: Look, they're just crunching the numbers.

BERAS: Right. And part of the reason inflation isn't going down soon is because we are spending a lot - a lot - which brings me to my indicator, which is 3%. That's the increase in retail spending in January. This January was super, super spendy, more so than other Januarys but even more than December and November. And this increase was in every retail sale category. So people are buying cars and tables, and they're going out for dumplings and martinis, and they are shopping at department stores. I mean, it's just out of control. Sales at department stores - are you guys ready for this? This was shocking to me.

WOODS: I'm ready.

BERAS: Sales at those stores were up 17.5% over the last month.

WONG: What?

WOODS: Wait, people still go to department stores?

BERAS: I mean, I thought I was the only one. But yes, apparently, there are other people shopping in department stores.

WONG: That's right.

BERAS: They're at the cosmetic counter. They're buying end tables. They're trying on shoes. It's - they're living the dream.

WOODS: OK. But real talk about these numbers. Like, prices are higher. People have to spend more just to buy the same amount of stuff. How much is inflation contributing to this?

BERAS: Yeah, yeah, of course, everything does cost more. But even if you look at, like, the retail numbers in real terms - so if you do some, like, fancy math, factor in the Consumer Price Index, the numbers are still higher than we expected, even a few days ago. But, of course, there's always a downside. I'm sure you all know what that is.

WONG: Buyer's remorse?

BERAS: That, too. Yeah. We'll see what returns look like.

WONG: It's like, this end table looks terrible in my living room. I hate it.

BERAS: We've all been there. But the real problem is for the Fed because the Fed is trying to slow the economy in an effort to curb inflation. So spending's up; good for retailers, bad for inflation.

WONG: OK. So more work for the Fed in the months ahead. And, Darian, you have an indicator about workers trying to make the most of this hot economy in trying to get better working conditions.

WOODS: That's right. So my indicator is one, as in one day passed between Tesla workers launching a unionization campaign and Tesla firing more than two dozen people at its plant in Buffalo, N.Y.

BERAS: Whoa.

WOODS: That included at least one member of the campaign organizing committee. That's according to the Workers United Union.

BERAS: Wow.

WOODS: And so I asked Tesla about it. I sent them an email. But they're - I got an auto reply saying their inbox was full, which is kind of surprising for a tech company. So anyway, we tried our best. Tesla also put out this statement on their website denying that this had anything to do with the union organizing effort and that the redundancies had been planned before they knew anything about it. Workers United allege that this is retaliation against the union organizers. And so that's the state of play. And this all reminded me about a conversation I had last year with Heidi Shierholz. She's the president of the Economic Policy Institute. And last year, we talked about this idea of retaliation against workers organizing unions. And to be clear, we're talking about this in general, not about Tesla.

HEIDI SHIERHOLZ: It is not legal for employers to retaliate against workers for organizing. It is not legal for employers to fire workers for organizing. So that shouldn't be happening. This should not be an issue.

BERAS: OK. So not legal but still seems to be happening. Starbucks got into trouble just the other day with the federal government for retaliating against its workers.

WOODS: Yeah. Heidi says the law isn't much of a deterrent.

SHIERHOLZ: The penalties are unbelievably weak. If they are found to have fired you illegally, the worst thing that can happen to them financially is that they have to reinstate you, bring you back on, pay you the back wages that they would have paid you over that period...

WOODS: But here's the kicker.

SHIERHOLZ: ...Minus the wages that you earned at another job during that period. It's just remarkable.

WOODS: Heidi says, for some companies, those consequences are just a cost of doing business.

SHIERHOLZ: There's, like, basically zero financial incentive to comply with the law.

WOODS: So unless the law changes, companies still have incentives to fire people associated with union organizing. Yes, it's illegal, but it's not costly.

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WONG: A quick heads up. We are taking off Monday for Presidents Day, so we will be back in your feed on Tuesday. Also, if you love THE INDICATOR, share it with a friend. You'll be helping us out and your friend, too. And maybe you and your friend want to submit a listener question to us. We are working on another listener questions episode in the coming weeks. So if you or that friend have an economics question just burning a hole inside of you, please send it to us. We just might answer it. Email us at indicator@npr.org. That is indicator@npr.org.

This episode was produced by Brittany Cronin, with engineering from Katherine Silva. It was fact-checked by Sierra Juarez. Viet Le is our senior producer. Kate Concannon edits the show, and THE INDICATOR is a production of NPR.

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