[Fox Business] Baltimore bridge collapse: Economists predict inflation ‘pinch’ for American consumers

Economists are predicting that Americans will feel a “pinch” in terms of their grocery bills, gas prices and other goods as local shipping and maritime traffic remain snarled Thursday following the collapse of the Francis Scott Key Bridge in Baltimore. 

FreedomWorks Senior Economic Contributor Steve Moore told FOX Business on Thursday that the disaster is “clearly a blow to the supply chain problems that we already have under [President] Biden” and that “we could see prices rise because a huge percentage of the cargo on the East Coast that’s shipped in is at Baltimore Harbor.” 

“People will feel a pinch in terms of their grocery bills, in their gas prices and things of that nature as a result of this bridge collapse,” he said. “The longer it goes on, the longer it takes to rebuild it, the worse the impact will be.” 

“I think the real question is how long this takes to get the bridge back up. And it’s not just the cargo that comes in on ships, that Northeast corridor is dependent on these bridges, too, in terms of the trucking. Trucks are also a major part of our transportation infrastructure,” Moore added. “And to go around the bridge is going to add a lot of time to getting goods and services to the stores and to the warehouses. This is a blow to the economy.” 

ECONOMIC IMPACT FROM BALTIMORE BRIDGE COLLAPSE WILL BE LONG-LASTING, TRADE GROUP WARNS 

Francesco Bianchi, a professor of economics and department chair at John Hopkins University, also told FOX Business on Thursday that “prices of goods and services that directly or indirectly depend on shipments that go through the harbor will increase” but the “overall effect might be mitigated by re-directing the shipments to other major harbors on the East Coast.” 

“However, the impact for the Baltimore economy is likely to be substantial,” he said, adding that “Baltimore is an important harbor and its inability to operate normally will push the overall supply chain a step closer to capacity, at a moment in which geopolitical risk already creates issues.” 

“I expect a limited impact beyond the Baltimore area, as other harbors should be able to absorb the shipments that will be redirected from Baltimore,” Bianchi also said. “Without any doubt, it will be important to understand what exactly happened and how to prevent such an event to occur again, in Baltimore or elsewhere.” 

Transportation Secretary Pete Buttigieg said during an appearance on Fox News on Wednesday that the U.S. has to be gearing up for the “supply chain implications” of the bridge collapse, which happened Tuesday after a Dali cargo ship struck one of its pillars. 

BALTIMORE BRIDGE COLLAPSE SPOTLIGHTS PAST DISASTERS CAUSED BY SHIPS 

“We are concerned about the local economic impact, with some 8,000 jobs directly associated with port activities,” Buttigieg later said during a White House press briefing. “And we’re concerned about implications that will ripple out beyond the immediate region because of the port’s role in our supply chains.” 

Buttigieg said “between $100 and $200 million of value that comes through that port every day, and about $2 million in wages that are at stake every day,” calling it one of the areas the federal government is “most concerned about.” 

“It’s one thing for a container or a vehicle or a sugar shipment to be absorbed or accommodated somewhere else,” he said. “But these longshore workers — if goods aren’t moving, they’re not working.” 

The disaster has left six construction workers dead, two of which were pulled out of the waters of the Patapsco River on Wednesday. The other four remain unaccounted for. 

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The Dali was heading from Baltimore to Sri Lanka and appears to have suffered power issues in the moments leading up to the bridge pillar collision. 

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[Fox Business] Dollar Tree stores to introduce merchandise with price tags up to $7

Dollar Tree customers will start to see some items carrying $7 price tags on the discount retailer’s shelves later this year. 

That will be the case for 3,000 stores, where CEO Rick Dreiling said Dollar Tree “expect[s] to expand our multi-price assortment by over 300 items at price points ranging from $1.50 to $7.”

The company, which also operates the Family Dollar brand, has been introducing products that come at costs above its $1.25 price floor. The upper limit had been $5 prior to the upcoming initiative, according to reports.

“But even as our multi-price assortment expands over time, the vast majority of the items sold in Dollar Tree stores will remain at our entry-level fixed price point,” Dreiling said of the new $7 upper limit. “Over time, you will also see us fully integrate multi-price merchandise more into our stores so our shoppers will find $5 bags of dog food next to our traditional $1.25 pet treats and toys, and our $3 bags of candy will be found in the candy aisle.”

DOLLAR TREE TAKING ‘VERY DEFENSIVE APPROACH’ TO SHOPLIFTING, CEO SAYS

Dollar Tree has been seeking to “present a more relevant assortment” to consumers at varying price levels, according to the CEO.

Under the multi-price point strategy, Dreiling told analysts and investors that Dollar Tree has previously had over 6,500 locations around the country selling frozen and refrigerated items at $3 to $5 price points. The brand will continue to expand those offerings, according to the CEO.

DOLLAR TREE TO CLOSE AROUND 1K FAMILY DOLLAR STORES

About 5,000 Dollar Tree locations also began offering $3 and $5 “center-store merchandise” last year, with 2,000 more slated to do the same in 2024, he said.

Dreiling also said that Dollar Tree’s introduction of different price levels and more variety has helped draw more higher-income shoppers. Those with incomes above $125,000 were the “fastest-growing demographic” for Dollar Tree, he said.

Data from Numerator found that customers tend to visit Dollar Tree about 20 times a year, spending $281 during those visits.

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The company has been working to revamp its two brands through various initiatives. For Family Dollar, one of those will include shuttering over 900 locations for “optimization.”

Dollar Tree brought in $30.6 billion in total revenues over fiscal 2023, marking an 8% increase year over year. Meanwhile, it saw a net loss of $998.4 million for the year.

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[Fox Business] Tesla deliveries expected to slump on China competition, weak demand

Electric vehicle maker Tesla is expected to release first-quarter delivery figures next week that show a sales slowdown amid increasing competition in the EV market and a waning boost from price cuts.

The world’s most valuable automaker has seen years of rapid sales growth but is bracing for a slowdown in 2024. Tesla is projected to deliver 458,500 vehicles in the quarter ending March 31, according to analysts polled by Visible Alpha. 

That amount is up from the 422,875 vehicles sold in the first quarter a year ago, but would represent a 5% decline from the preceding fourth quarter of 2024.

Tesla CEO Elon Musk has aggressively cut prices for its most popular models since late 2022 in an effort to boost sales amid the high interest rate environment, which has increased the cost of car payments for customers.

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Musk has said the price cuts are needed to maintain demand for Tesla’s vehicles and to keep its production facilities humming, and he has blamed winter and high borrowing costs for the slowdown in demand.

The company temporarily cut prices for its Model Y rear-wheel drive and long-range variants by $1,000 each in February, though those cuts ended at the beginning of March.

“This is the essential quandary of manufacturing: factories need continuous production for efficiency, but consumer demand is seasonal,” Musk said last month when responding to a post from Tesla on X, formerly Twitter, that indicated prices would tick back up in March.

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Tesla is currently offering $7,680 discounts on some of the new Model Y vehicles for U.S. customers. The discounts have frustrated some Tesla customers who have seen the value of their vehicles decline due to the price cuts.

“Teslas have the dubious honor of being the fastest-depreciating vehicles in the U.S.,” HSBC said in a report last week. “We can see how cheaper works for consumables, but we are less convinced it works for consumer durables for which residuals are part of the cost equation.”

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In January, the company warned of “notably lower” sales growth in 2024 as it focuses its production on its next-generation EV, which is code-named “Redwood.” 

It also faces the loss of access to $7,500 per car federal tax credits on its Model 3 compact sedans, which no longer qualify for the credit due to non-compliance with newly-implemented eligibility restrictions for battery materials sourced from China.

Mounting competition from cheap EVs made by Chinese automakers like BYD, which surpassed Tesla as the world’s top-selling EV maker in the fourth quarter of last year amid a fierce price battle, is also creating headwinds for Tesla’s bottom line..

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In the first two months of this year, Tesla delivered 131,812 vehicles made in China, down 6.2% from a year ago.

Tesla’s stock is down over 28% year to date and more than 6% over the last year.

Reuters contributed to this report.

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