Will the Fed hold steady?

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**Kimberly Adams** (0:31)
Will the Fed hold steady given the uncertain outlook?
From Marketplace in Washington, I'm Kimberly Adams. The Federal Reserve wraps up a two-day meeting today with an interest rate announcement from Chairman Kevin Warsh this afternoon. This week's meeting takes place against an ever fluctuating background of uncertainty. Marketplace's Nancy Marshall-Ginzer has more on what we can expect.

**Nancy Marshall-Ginzer** (0:54)
There are lots of questions swirling around this Fed meeting, like will the war in the Middle East heat up again, causing another spike in oil prices? And what will the data we get later this week on things like inflation and GDP look like? Jerry Templeman is a former New York Fed economist, now with Mutual of America Capital Management. With all this uncertainty, he expects the Fed to leave rates unchanged this week. But he says the next meeting in September could be a different story, because there will be a lot more data by then.

**Jerry Templeman** (1:24)
There's going to be two readings of inflation for both July and August in the CPI. There's going to be two readings of employment also for July and August.

**Nancy Marshall-Ginzer** (1:33)
Templeman says we could also have a better sense of the trajectory of the war by September. But even if we don't, he says the Fed can't ignore oil price shocks forever. Since energy goes into just about everything, higher oil prices could seep into the broader economy. I'm Nancy Marshall-Ginser for Marketplace.

**Kimberly Adams** (1:51)
We're hearing from some companies in the consumer goods and grocery space today, including Procter & Gamble this morning and Sprouts after market close. It's a nervous time for companies that rely on selling essentials. A recent analysis from Bain and Company shows consumers have been consistently pulling back on grocery spending for a year now, down an average of about 2 percent. Marketplace's Christian Schwab has more.

**Christian Schwab** (2:16)
It's no secret that a trip to the grocery store is more expensive than it was a handful of years ago. Kurt Grichel leads the America's retail practice at Bain and Company.

**Kurt Grichel** (2:25)
That $300 big stock up grocery trip in 2019 is now costing you $400.

**Christian Schwab** (2:31)
It's a reason why consumers are pulling back on grocery spending. But it's not the only one. Gas prices are also up, and SNAP enrollment has fallen since the federal government changed benefit rules.

**Kurt Grichel** (2:43)
To put that all together, it just ends up with consumers that are feeling very stretched.

**Christian Schwab** (2:48)
To save money, shoppers are focusing on essentials and switching to store brands. Meanwhile, retailers are highlighting value by pushing loyalty programs or rotating sales.
But Bobby Gibbs, a partner on Oliver Wyman's retail and consumer goods team, says there's a limit to the discounts companies can offer.

**Bobby Gibbs** (3:07)
Grocery is a high fixed cost business. They have to have the stores, they have to have the people in the stores, they have to have the logistics network.

**Christian Schwab** (3:15)
So, stores have looked for other ways to earn, including collecting and selling customer data to brands or selling ad space.

**Bobby Gibbs** (3:23)
Those advertisers can be on-site, either in the store or much more common on the website.

**Christian Schwab** (3:30)
Gibbs says while margins on grocery items is around 2%, the margins on grocery ads is something like 50 I'm Kristin Schwab for Marketplace.

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