The CQ: The Math For Home Buying And What Happens To All The Stuff You Don't Want
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By Forerunner
What We’re Talking About on Slack:
The math for buying a home no longer works, says The Wall Street Journal. Here are just a few stats to explain why: “Before the Fed started raising rates, a person with a monthly housing budget of $2,000 could have bought a home valued at more than $400,000. Today, that same buyer would need to find a home valued at $295,000 or less.” That said, the national median existing-home price has increased to its highest level at $392,000, and the average monthly new mortgage payment is 52% higher than the average rent for an apartment.
Corporate America is testing the limits of its pricing power. It used to be that companies would raise prices about once a year, but now with more major retailers using digital price displays, price increases can happen at the touch of a button and executives are experimenting with how high they can go before consumers stop buying. Even as costs for energy, transportation, and labor have started to come down since the pandemic, big companies have not passed down these cost cuts to customers. “Many corporations are talking on earnings calls about how they are prioritizing profit margins — even when that translates into less growth.”
Shoppers, facing holiday spending, turn to loyalty programs. According to a PayPal survey, 39% of consumers plan to use rewards and cash-back offers to buy holiday gifts, and one in four shoppers feels that buying gifts using rewards is getting something for free. With 42 million members, Ulta has one of the largest retail loyalty programs, and earning points was the main reason that 56% of shoppers said they shopped at Ulta over Thanksgiving weekend. “Ulta has the highest penetration of any loyalty program out there, and 95% of its revenue is attached to a loyalty member.”
That QR code you’re about to scan could be risky, the F.T.C. warns. The latest scam involves hiding malicious links in QR codes—scammers slap their own QR code on top of legitimate ones on parking meters and restaurant menus or send the patterns to be scanned by text or email in ways that make them look official, which then allows them to steal any information you add to that website or install malware. One cybersecurity company said they saw more than 60,000 QR code attacks in the third quarter of 2023.
The Atlantic takes us on a tour of what happens to all the stuff you don’t want, i.e. the massive infrastructure—transporters, warehousers, liquidators, recyclers, and resellers. Today 20% to 30% of all purchases are sent back and the reverse logistics industry was valued at nearly $1 trillion in 2022. Before the days of e-commerce, return rates were in the single digits. Though some retailers have started charging customers return fees to help subsidize this expensive operation, Inmar says that the new policies have not affected the volume of returns they receive.
The American store is shrinking. The average store size in the U.S. is the smallest—at 3,200 square feet—it’s been in 17 years. Chalk it up to the prevalence of e-commerce and the changes in the way that consumers prefer to shop today. Nordstrom, Target, Macy’s, and Bloomingdale’s have all started embracing small-format stores, using data from online orders and social media to curate tighter inventories. This gives retailers the benefits of lowering rent costs and moving into open-air shopping centers in suburbs where customers are increasingly shopping.
Bloomberg asks: How do small-business owners feel about the U.S. economy? Not great. “If the economy falters, it will be the country’s 33 million small businesses that send the warning flares. Government data show those companies account for two of every three jobs added in the past 25 years.” A new survey reveals that small-business optimism dropped to a six-month low with many small companies decreasing jobs and nearly a third of them reporting a decline in earnings in the past three months.
House, marriage, kids: Millennials and Gen Z who try to follow a “traditional” path of financial milestones may be majorly messing up their finances. Data suggests that a good portion of young people today are swapping the order of the typical American Dream: having kids before getting married, then buying a home. Couples who are more flexible on the order of their milestones may then be able to hold off on buying a house when the market is better and interest rates are lower, as opposed to couples who feel they must abide by social constructs and buy a house before having kids.
Why tweens can’t live without $62 face cream. Girls ages 9 to 14 are becoming obsessed with elaborate skincare routines (“cleanser, hyaluronic acid, moisturizer, a mix of glowing drops, all sealed with a serum”) and they’re picking out holiday presents from the TikTok videos of beauty creators. According to the CEO of Bubble Skincare, ““For us, the 13 and up is a massive part of our community and audience. They test the products with their friends, they let them try it and share it. You don’t see that kind of testing and sharing amongst adults.”
Gen Z and millennials powered a massive live-events comeback that will carry into more concerts and travel next year. A report from StubHub showed that 60% of Gen Z’ers would skip major life events (a new family member being born, a friend’s wedding, or a pre-planned vacation) if they could be front row for their favorite artist's live performance. A different survey found that 63% of Gen Z and 59% of millennials said they would prefer spending money on "life experiences" (which includes travel and concerts) over investing in their retirement, while another revealed that more than 78% of millennials prefer experiences over products. “The demand for experiences is so large that between 2022 and 2032, the U.S. economy is projected to add around 351,000 jobs in the leisure and hospitality sector, ranging from chefs to amusement park attendants.”
Portfolio Highlights:
WWD reports on the strength of the supplements industry with quotes from Ritual’s founder and CEO Katerina Schneider as well as a mention of Tally Health’s use of the ingredient berberine.
The New York Times’ Wirecutter named the Oura ring the best sleep tracker overall.
Glossier CEO Kyle Leahy appeared on Bloomberg News to discuss how Glossier has evolved, and their plans for the future.
CNN reviews Cotopaxi’s Fuego Hooded Down Jacket, saying it’s “worth investing in.”