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Ongoing tariff threats from Washington and potentially sweeping government job cuts have darkened consumers mood and may be weighing on an otherwise mostly healthy economy. Data released Friday showed that consumers slashed their spending by the most since February 2021, even as their incomes rose. On a positive note, inflation cooled, but President Donald Trumps threats to impose large import taxes on Canada, Mexico, and Chinathe United States top trading partnerswill likely push prices higher, economists say. Some companies are already planning to raise prices in response. Americans cut their spending by 0.2% in January from the previous month, the Commerce Department said Friday, likely in part because of unseasonably cold weather. Yet the retreat may be hinting at more caution by consumers amid rising economic uncertainty. The roller coaster of news headlines emanating from Washington D.C. is likely going to push businesses to the sidelines for a time and even appears to be impacting consumers, said Stephen Stanley, chief U.S. economist at Santander, in an email. The reduction in consumer spending coupled with a surge of imports in January, also reported Friday, as companies likely sought to front-run tariffs led the Federal Reserve’s Atlanta branch to project that the economy would shrink 1.5% at an annual rate in the January-March quarter, a sharp slowdown from the 2.3% growth in the final three months of last year. Most analysts still expect the economy to expand in the first quarter, but at a much slower pace. Stanley lowered his estimate for first-quarter growth to just 1.25%, from about 2.25%. Inflation declined to 2.5% in January compared with a year earlier, down from 2.6% in December, the Commerce Department said Friday. Excluding the volatile food and energy categories, core prices dropped to 2.6%, the lowest since June, from 2.9%. Economists noted that inflation would likely keep cooling, but the progress could be upended by tariffs. Trump said Thursday he would impose 25% duties on imports from Canada and Mexico, though just 10% on oil from Canada. He also said he wanted to double the current tariff on imports from China to 20%. Trump is also calling for widespread layoffs of federal workers, which could cause hundreds of thousands of job losses and potentially lift the unemployment rate. Randy Carr, CEO of World Emblem, says the tariffs, if imposed, will force him to raise prices and cut jobs. World Emblem makes patches, labels and badges for companies, universities and law enforcement agencies. The firm has factories in Georgia and California but it makes about 60% of its products in Mexico. Carr said if the 25% import taxes are imposed, he expects to raise prices by 5% to 10%. He also plans to cut a handful of jobs among the 500 workers his company has in the United States to help absorb the rest of the costs. Carr said he would also cancel about $9 million in planned investments in artificial intelligence and online commerce. Its so annoying, he said. Right now you have this volatility, and so you really cant plan anything. You just got to wait until we get a final verdict from from the administration. Its definitely not punishing Mexico, its punishing us.” The inflation-fighters at the Federal Reserve said in January they planned to keep their key short-term interest rate on hold, at 4.3%, to slow borrowing and spending enough to lower inflation back to their 2% target. The Fed’s elevated rate has contributed to higher borrowing costs for mortgages, auto loans, and credit cards. The Fed prefers Fridays inflation measure to the more widely-known consumer price index, which rose for the fourth straight month in January to 3%. Fridays gauge calculates inflation slightly differently: For example, it puts less weight on the costs of housing and used cars. Inflation spiked in 2022 to its highest level in four decades, propelling President Donald Trump to the White House and leading the Fed to rapidly raise interest rates to tame prices. It has since fallen from a peak of 7.2%, and some economists expect it could fall closer to 2% in the coming months, absent tariffs. The inflation data could be distorted higher at exactly the time when the Fed would otherwise be in a position to declare a win, Stanley said. One other bright spot in the report was that incomes jumped 0.9% in January from December, fueled in part by a large annual cost of living adjustment for Social Security beneficiaries. Yet Americans spent less anyway, in particular on cars, where purchases fell sharply. Some consumers could be trying to save money after splurging during the holiday shopping season. Credit card debt surged in December, economists noted. A big concern right now is whether tariffs will push up inflation, or slow the economy, or in a particularly toxic combination both. Jeffrey Schmid, president of the Fed’s Kansas City branch, said Thursday he has become more cautious about inflation, in part because Americans are expecting higher prices in the coming months. But he also said discussions with businesses in his district suggest that elevated uncertainty might weigh on growth. A weaker economy would normally lead the Fed to cut rates, but if inflation remains a threat, it would likely keep rates unchanged. Many toy companies had expressed relief when Trump announced only a 10% increase in tariffs on products from China because they thought they could share the extra costs with retailers. But a 20% tariff means that many will have no choice but to raise prices. Around 80% of toys sold in the U.S. are made in China, according to industry reports. Curtis McGill, CFO of small toy maker Hey Buddy Hey Pal, called the move a nightmare scenario. McGill had just confirmed a price for a toy with one major retailer Wednesday, but then had to withdraw it after he heard about the tariffs. For the year-end holiday season, he estimates his toys will see a 10% price increase. And Walmart, the nations largest retailer, last week cited uncertainty about the health of the American consumer as it provided weaker-than-expected sales growth estimates for this year, sending shares lower. Worries about tariffs pushing prices higher have sent consumer confidence plunging, unwinding themodest gains that had occurred after the election. Christopher Rugaber and Anne D’Innocenzio, AP business writers AP writer Josh Boak contributed to this report.
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E-Commerce
An unsubstantiated online theory has recently taken hold, claiming that family vloggers are fleeing Los Angeles to escape newly introduced California laws designed to protect children featured in online content. In recent years, several states have introduced new legislation aimed at protecting child influencers from exploitation. In September 2024, California Governor Gavin Newsom, with support from former child star Demi Lovato, signed two key bills designed to ensure children and teenagers who perform in online content are protected from financial abuse. One of the most important bits of the new legislation establishes financial and legal protections for minors featured in monetized online content (i.e. child vloggers) by mandating that their parent or guardian set aside a percentage of their earnings in trust accounts. With the passing of the law, California became the third state in the country to legislate protections for influencer kids, joining Illinois and Minnesota. Attention has now shifted to influencers whose children feature heavily in their content, some of whom have made seemingly abrupt moves across the country. Videos speculating about the real reasons for these relocations have gone viral, racking up millions of views. But the influencers themselves insist the moves have nothing to do with Californias new laws. Over the past year, several high-profile family influencers have either relocated from California to Tennessee or announced plans to do so. This includes the LaBrant family, who have 12.8 million YouTube subscribers; TikToker Cecily Bauchmann, who has 2.2 million followers; and Brittany Xavier, who has 5.1 million followers on TikTok. I feel like thats a little suspicious, one TikTok creator posted. I wonder how many of those are a direct correlation to the fact that now they have to pay their children. All of the families have publicly denied the new California law influenced their move. Fast Company has reached out to the LaBrants, Bauchmann, and Xavier for comment but has not heard back as of publication. After users began flooding Xaviers social media posts with comments regarding this theory, the influencer took to TikTok to shut down the rumors. It has been a wild week on TikTok, she says into the camera as she does her makeup. She goes on to cite a mold issue in their rental home as the reason for their hasty relocation. The assumption that we moved to avoid paying our children is so laughable, she says. My income doesnt depend on if my kids are in my videos or not. But weve always made sure to set them up financially regardless. However, many in the comments remain unconvinced. “‘Found mold’ = laws changed, one person wrote. Another added: Brittany the likes and replies aren’t helping the cause.” Another theory is that influencers are leaving California due to its political leanings. Xavier herself hinted at political motivations when responding to a comment suggesting she wanted a red state”: CA leadership is a mess at the moment, they need help. Hoping here has competent leadership, we shall see.
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E-Commerce
Dek: The health supplement company counts investors like Lewis Hamilton and Alex Honnold. Kat Cole is no stranger to a career pivot. At Hooters, she went from waitress to vice president as she worked her way up the restaurant chain’s corporate ladder. Then, over the course of more than 10 years at Cinnabon parent Focus Brands, she built a career selling sweet treats to consumers. In 2024, Cole made the leap from selling fast food to health supplements by becoming CEO of AG1 (formerly known as Athletic Greens), which sells a green multivitamin and nutrient powder. Valued at $1.2 billion in 2022, AG1 has been endorsed by athletes like Olympic runner Allyson Felix and Formula One driver Lewis Hamilton, as well as an endless roster of wellness and fitness influencers. (Some doctors have questioned the need for supplements like multivitamins altogether). Cole spoke to Most Innovative Companies host Yasmin Gagne about growing AG1s business, the brand’s Ozempic opportunity, and whether she thinks it will ever end up in the grocery aisles. Listen to our conversation with Cole and a segment with Ankler Awards Editor and Prestige Junkie host Katey Rich, who explains how studios have conducted their Oscar campaigns this year. https://embed.podcasts.apple.com/us/podcast/how-studios-navigate-the-oscars-race/id1576874503?i=1000694523411 How does a former fast food executive come to run a health company? There’s a few ways to look at this. One is just the journey that I’ve gone on as a woman, as a mom, and over time how nutrition and health has become more important to me personally. We’re also so much more informed now. Even people who are in their thirties are thinking of healthspan and nutrition. There are things, like my mom getting breast cancer when my kids were very small and she was starting her business, or when I had my kids at 39 and 41 after a few miscarriages in between, that put nutrition and health more squarely in my focus as an individual. Health also became a bigger part of one where I believe consumers were going and therefore what the market opportunity and business would be. I am also a leader experienced running companies at scale, and 10 years ago there werent a lot of scaled healthful nutrition companies that made sense for someone like me to manage. Now AG1 is big enough for me to come in and lead this chapter. Do you have any guilty pleasures? I used to say everything in moderation. Now I think that phrase, in some cases, has been used to the extreme where in aggregate, a few things in moderation are no longer moderation. I think very seriously about what my kids see me eat and how we make decisions when I treat myself. But I am a human, not a robot. I treat myself once in a while with an ice cream or a cookieI have a 5 and a 7-year-old During COVID, sales of multivitamins and supplements in general increased by 50% between 2018 and 2022. AG1 is 15 years oldhow do you compete with the explosion of newer brands in the sector? In any market, the presence of growth and competition is an indicator of consumer demand. So as it relates to health and wellness, if there are more consumers demanding more options, then that means those consumers are going on a health awareness journey. As a businessperson, that means I’m in the right space. That said, consumers have more options. It can get tougher to appreciate the distinction between those options. So when I think about the things that are required to stand out today that may not have been on customer’s minds as much 10 years ago. That’s things like human clinical trials and research for supplements that is not required of the industry, but is what we have invested in for years. I think about third-party certificationswe’ve been NSF[-certified] for sport for eight or nine years, which is a third-party certification that not only verifies that what’s on the label is in the product, it also ensures there are no contaminants or doping agents. We pay a third party to keep our product all the way through the supply chain in check. Those are things we’ve always done, but years ago we actually didn’t brag about it. We didn’t market it because there was so much demand. Now we are showing proof of the third party studies we do. It’s a different approach to education information and go to market. I was surprised to find out theres an even gender split among AG1 customers. I was surprised because I assumed that most would be men into biohacking. I assumed that as well when I was an early customer. I thought I was this outlier lady. Once I got into the business and saw the demographic split, I wanted to accelerate that shift to a more female customer base. When I joined, it was like 40% or trending that way, and now it’s 50-50. One reason [for your misconception] might be that some of our more popular creator partners thought leaders, academics, people with big podcasts, or platforms were male. The reality is womenand this has been accelerated by COVIDwant to live long and strong. It’s not about being frail or delicate, it’s about fuel, it’s about strength, it’s about power and nutrition. What I see in our customers is the fastest growing customer group by age is 45-plus. As we get older, we age into new reasons to need to supplement and want to supplement an already healthy lifestyle, and there are new ways to afford a premium product. Our younger consumers tend to be athletes and fitness enthusiasts who really value their nutrition and take it more seriously. That has evolved over time. Then I started interviewing our customers, our female customers in particular, in the early years when I joined. What I found is they had heard about it from a partner, a trainer, a physician. Their recommender tended to be male in those earlier years. But then they didn’t have as many options being marketed to them as we have now. Now we’re in an interesting space where our split is 50-50 both for existing customers and new ones joining us, but women in particular are so marketed to in this space. Its confusing. Its difficult to know what to trust, and we have so many distinct life stages, from pre and postnatal, perimenopausal, menopausal, postmenopausal. There’s a lot of support that can come from nutraceuticals or nutrients to help with those life stages. So now the job we need to do for our female customers is being really clear where we fit into their stack and explain why they should trust AG1 in the confusing landscape of supplements. At Focus Brands, you brought brands like Cinnabon to different sections of the grocery aisle, with products stocked in the snacks section, and the frozen food section, for instance. Are you going to bring the same playbook to AG1? The core AG1 is this daily health drink in a powder form that people mix on their own in water or put in their smoothies. Retailers love this idea. It’s a very straightforward supply chain. It’s shelf-stable in its packaging, and there is built-in demand that is not necessarily being fully realized by the e-commerce platform. So retailers love the idea of a brand people know but haven’t yet tried. There’s brand awareness, product fit, and the format makes sense. You can imagine some retailers that have a heavy inclination toward sampling and education and letting people try and learn about a product before they buy. That’s the opposite of our current model. If you hear abut it and you go online, the best value is to subscribe. So you’re actually subscribing before you try retail. Some of the retailers can help us reach a customer that we haven’t been able to reach. AG1’s valuation$1.2 billionis a huge number for a CPG company. And I think we’ve seen a lot of CPG companies struggle to live up to that kind of valuation. You have investors, including Lewis Hamilton and Alex Honnold, who are probably curious when theyre going to see a return. Is the company ever going public? I wont speak to what the particular outcome is. That valuation was on $160 million in revenue we did that year. January 2022 was peak market fervor, there was a lot of froth. However larger marquee investors who came to the table are supersmart. They saw the fundamentals of the business. We were $160 million in revenue that year, growing at hundreds of percent with an incredible body of opportunity in front of the business. So if you look at what’s happened since then, we were at $160 million at the end of 2021, we’re projecting $600 million in revenue now. We’ve well over 3X the business. So even if valuations have come down to earth a bit, the business has grown unbelievably. And so our investors are very happy. Do you plan on launching more AG1 products? Our customers have asked us to launch so many things, but if we did it, it would create confusion. AG1 is foundational nutrition. It’s this idea that first and foremost, the best driver of health from a nutrition perspective is whole foods. Then this idea of something called a foundational nutrition layer, which essentially is nutrients and gut health support. Foundational nutrition is an idea that there is such a thing as a group of supplements that help most people cover many [health] gaps. It’s like the future of what the multivitamin was supposed to be, except no one takes a multivitamin and says, my digestion’s better. No one takes a multivitamin and says, I feel more energy. But they do with AG1 because it’s more comprehensive. This idea of having a foundational routine is the base of the business. As we innovate products, the question is: what do our customers need from us? And I’ll just give you a few examples. Might they be at different life stages? You can imagine what some of those might be that emulate some of the journey multivitamins.
Category:
E-Commerce
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