‘We’re Incredibly Bullish About the U.S. Economy’

The recovery is attracting big investments from foreign businesses.

Good morning!

Here are today’s highlights: Fear of inflation subsides. A startup wants to buy your ecommerce site. And car dealers are losing younger buyers to online platforms.


Millennial car buyers are shunning dealers: “In 2020 millennials bought more new cars than any other age group, accounting for 32 percent of total new-car sales, edging out baby boomers for the first time, according to the market research firm J.D. Power. And those millennials were nearly twice as likely as boomers to shop for and buy a vehicle — new or used — entirely online, according to Cars.com, which outfits dealers with technology for online sales. Millennial financial clout, disdain for dealerships and the pandemic have converged to shift how cars are sold, which may benefit car buyers and dealerships alike beyond the pandemic.”

  • “The transition makes it a hot market for online car-buying services and software platforms, such as Cars.com, which went public in 2017; Shift and Vroom, which both went public in the last year; and Carvana, whose stock has gained more than 200 percent since March 2020.”

  • “Many more services are emerging, like CoPilot, Gettacar, CarBevy, CarSaver, and Joydrive, some of which are backed by big-name venture capitalists.”

  • “The test drive — which made dealerships unavoidable — has been replaced with what might be called test ownership: a tryout period with easy returns.” READ MORE

OpenStore makes automated bids to roll up small ecommerce sites: “In 2014, Keith Rabois co-founded OpenDoor Technologies, a startup whose main product was an algorithm that would determine the value of homes based on data such as the ZIP code and the material of the countertops, then make cash offers to the owners, sight unseen. He’s now trying a similar model—right down to the name—with OpenStore, a startup that makes automated purchase offers to small e-commerce businesses. Although flipping online storefronts may not be as familiar as the all-American activity of house-flipping, OpenStore is jumping on a trend that has been gaining momentum in the past few years. Private equity firms and other investors have been raising large sums to buy storefronts that operate on Amazon.com or Shopify, then combining them in an attempt to make them more valuable.”

  • “A major distinction for OpenStore is that it’s eschewing Amazon sellers to focus on those who operate chiefly through Shopify.”

  • “‘We want to have control about how we stitch these together,’ [Rabois] says. ‘And obviously Amazon is not going to just let us do whatever we want.’”

  • “Shopify is embracing roll-ups. It has built its own exchange for its storefronts, where businesses sell for a few thousand dollars to more than $1 million.”

  • “OpenStore plans to take over operations of the businesses it buys, saving money by automating customer support, shipping, and other functions and looking for volume discounts.” READ MORE

Happy Prime Day! “Amazon launched Prime Day in 2015 as a way to boost sales. The event has emerged as a smaller-scale, summer version of Black Friday that is a kickstarter for online shopping in an otherwise slow period. And it has also offered an important boost to Amazon’s quarterly revenue. Amazon’s U.S. Prime Day sales are expected to increase 18 percent from the previous event to $7.3 billion, according to research firm eMarketer. Amazon doesn’t report its total Prime Day figures, but the retailer in October said sales by its third-party sellers surpassed $3.5 billion for the 2020 event.”

  • “Including sales from other retailers online, Prime Day will generate roughly $12.18 billion in sales in the U.S., a 17-percent increase from the last Prime Day, eMarketer predicts.”

  • “Amazon this year is promoting up to 50 percent off from its devices line, which typically consists of bestselling items such as its Echo smart speakers.” READ MORE


Employees are quitting their jobs in record numbers: “According to the Labor Department, nearly four million people quit their jobs in April, the most on record, pushing the rate to 2.7 percent of those employed. The rate was particularly high in the leisure and hospitality industry, where competition for workers has been especially fierce. But the number of those quitting registered across the board. Economists believe that one reason more workers are quitting is simply a backlog: By some estimates, more than five million fewer people quit last year than would otherwise be expected, as some workers, riding out the labor market’s convulsions, stuck with jobs they may have wanted to leave anyway.”

  • “With fewer opportunities for spending, some people were able to save money and pay down their debts, giving them a cushion to leave jobs with which they were dissatisfied.”

  • “Other workers, disinclined to give up remote work, are abandoning jobs that are no longer affording them as much flexibility.”

  • “Start-ups surged during the pandemic, particularly in Black communities, as stimulus checks and unemployment benefits helped seed entrepreneurs’ dreams and bolster their confidence.” READ MORE


As the price of lumber falls, fear of inflation subsides: “From sawmills to store shelves to your own hammer swings, lumber can tell you a lot about what’s going on in the economy right now. Lumber prices soared over the past year, frustrating would-be pandemic do-it-yourselfers, jacking up the costs of new homes and serving as a compelling talking point in the debate over whether government stimulus efforts risked the return of 1970s-style inflation.”

  • “But since then, the prices of those same plywood sheets and pressure-treated planks have tumbled, as mills restarted or ramped up production and some customers put off their purchases until prices came down.”

  • “It’s a dance of supply and demand that has reassured many experts and the Federal Reserve in their belief that painful price spikes for everything from airline tickets to used cars will abate as the economy gets back to normal.”

  • “‘Many of the extreme price spikes we’ve seen in recent months are likely to reverse for Econ 101 reasons,’ said Jan Hatzius, chief economist at Goldman Sachs.” READ MORE


Foreign businesses are eager to invest in the U.S. economy: “The extraordinary recovery of the U.S. economy is likely to make the country the world’s top destination for overseas investment this year and next, according to new United Nations projections, with foreign businesses drawn by the prospect of a rapid and sustained rebound in consumer spending and the Biden administration’s multitrillion-dollar infrastructure plans.”

  • “For 2021 and 2022, the U.N. expects the U.S. to cement its leading position, with China in the second spot, as overseas investors expand capacity to meet huge post-pandemic demand.”

  • “The Federal Reserve expects the American economy to grow 7 percent this year, supported by nearly $6 trillion in approved stimulus spending and about $2.6 trillion in extra savings American households have built up during the pandemic.”

  • “‘We’re incredibly bullish about the U.S. economy, even more so now,’ said Mark Vassella, chief executive of BlueScope Steel Ltd., an Australian steel company that is expanding capacity in the U.S. to meet demand from car makers and construction companies.” READ MORE

On Roscoe Street on Chicago’s North Side, businesses are trying to get back to normal: “Five of the nearly 50 businesses on the strip, including a music school for preschoolers and a Latin fusion restaurant, closed permanently, said Colton Davis, business services manager for the Lakeview Roscoe Village Chamber of Commerce. But 10 new businesses have come in to replace them.”

  • “The owners of Roscoe Village Bikes say the shop should be thriving as Covid-19 restrictions fade away, but sales this month are down about 10 percent from a year ago because the shop can’t get enough new bikes and key parts to meet demand.”

  • “A few blocks west of the bike shop, sales are brisk at Savannah Supper Club, which offers cocktails and comfort food like prime rib and banana cream pie. But owner Marc Wuenschel, who opened and closed multiple locations of his three small restaurant chains in the city during different phases of the pandemic, is paying more for rubber gloves and chicken thighs as well as cooks and bussers.”

  • “‘Right now, the challenge is people are trying to steal my employees,’ he said, causing him to raise pay in the kitchen by $2 to $3 an hour to around $18 to $20 an hour.” READ MORE


Companies are creating carbon labels to show consumers the environmental cost of their products: “Carbon labels have already cropped up on salads, sneakers and even face creams. Unilever, the maker of Dove soap and Lipton teas, has said it will add labels to all of its 70,000 products. ‘We think of carbon as the new calorie,’ said Prakash Arunkundrum, head of global operations and sustainability at Logitech, the technology accessories manufacturer, which recently rolled out carbon labels on several products including a gaming mouse and keyboard.”

  • “‘We want carbon to be that thing that you look at and you say, ‘Okay, am I going to really need this in my life today?’”

  • “The labels estimate a product’s environmental impact from cradle to grave as a carbon equivalent reflecting the greenhouse gas emissions or CO2e spent in its creation, transportation, use and end of life, as measured in grams or kilograms of carbon.” READ MORE


A feud is brewing between residents of Napa Valley and one of the fastest growing startups ever: “Pacaso, based in San Francisco, was co-founded by Zillow Group founder Spencer Rascoff, and it counts former Starbucks Corp. chief executive Howard Schultz among its earliest investors. The company claims to have reached unicorn status faster than any company in U.S. history, hitting a $1 billion valuation within six months of launching last year. The Covid-19 pandemic was a boon for the business. Remote work inspired many to spend time away from cities, but rising home prices and a short supply of homes meant fewer people could afford to buy an entire second home of their own.”

  • “Austin Allison, Pacaso chief executive and a Napa resident, said the local unpleasantness was misplaced outrage about the larger shortage of affordable housing in California.”

  • “Homeowners in the Napa Valley say their quiet residential cul-de-sacs are on the brink of becoming high-traffic party zones and no longer affordable to local families. Anti-Pacaso signs dot property lines.”

  • “Napa Valley’s resistance could become a roadblock for Pacaso’s model, which relies on offering luxury-home stays inside traditional residential neighborhoods and away from typical vacation zones. The company so far has launched in 20 U.S. markets and has plans to expand to Europe.” READ MORE


Episode 64: Adventures in Candyland: This week, Stephanie Stuckey tells Jay Goltz and Dana White about moving closer to the candy factory she recently bought to get a better feel for the people, the operation, and the challenges. Right now, those challenges include recruiting enough employees, absorbing increased supplier prices, and figuring out how much she should raise her own prices: “We can only give up so much of our margin, right?” she tells us. To which Jay responds, “Why give up any?” Plus: we talk about competing for labor with Amazon, whether to require employees to get vaccinated, how to manage legal fees, and whether Dana’s feelings of FUD have eased.