A "Silk Road" in the Arctic?

**SPEAKER_1** (0:00)
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**Novasafo N** (0:31)
Big retailers this week could have a lot to tell us about the US economy.
From Marketplace in Los Angeles, I'm Novasafo N for Kimberly Adams. Good morning. How is the US consumer doing? This is a key question since consumer spending powers much of our economy. Last week, there was a warning sign as the government's report for retail sales in July showed a significant dip. This week, we'll get a look from another angle, retailers themselves, Home Depot, Target, Lowe's, and Walmart. All are scheduled to release quarterly results. Joining me now to discuss this is Julia Coronado, founder and president of Macro Policy Perspectives. Good morning.

**Julia Coronado** (1:10)
Good morning.

**Novasafo N** (1:12)
What if anything might retailers tell us this week that the government's retail sales report last week did not?

**Julia Coronado** (1:17)
Well, of course, it can confirm or deny the weakness that we saw. There's always volatility in the data, and in general, consumers have been hanging in there okay.
But of course, the retailers themselves will be able to tell us how much consumers are spending, whether they're getting more budget conscious and what they expect in the second half of the year.

**Novasafo N** (1:40)
And what's your working hypothesis for what we're likely to hear from the retailers?

**Julia Coronado** (1:44)
We did have, remember, a tax cut earlier in the year, and that did provide a boost to consumers despite higher gas prices, and that effect is fading. We don't expect consumers to be collapsing, but they're facing still high gas prices, wage growth. That's okay. They still have jobs, but the labor market isn't strong or booming.
And so, yeah, I would expect to hear some notes of caution, but overall, consumers are still getting up and going to work and spending their paycheck, but not in a kind of wild abandon. They're very budget sensitive.

**Novasafo N** (2:21)
Speaking of not wild abandon, another indicator we got was the preliminary measure of consumer sentiment from the University of Michigan for this month. It fell 8% from July and down across party lines. Does that show up in the hard data, you think, as we head into the fall?

**Julia Coronado** (2:37)
We always have to be cautious with consumer sentiment. Consumers have been pretty glum for a little while. It ebbs and flows with developments tied to the war and gas prices. But in general, again, that adds to the caution that consumers are gonna be budget conscious and watch what they're spending, and maybe not spend as much as they have been.

**Novasafo N** (2:59)
Julia Coronado is the founder and president of Macro Policy Perspectives. Thank you.

**Julia Coronado** (3:03)
My pleasure.

**SPEAKER_1** (3:29)
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**Novasafo N** (4:36)
China sent several cargo ships through an arctic route over the weekend along waters hugging Russia's northern coast. The two countries are trying out a path that could become a new shipping lane. Aside from southern routes such as the one through the Suez Canal that's been used for more than a century to move goods between Asia and Europe.
Alice Hancock covered the story for the Financial Times. Welcome to the program.