Huge retail chains like Walmart  (WMT) , Target  (TGT) , CVS  (CVS) and others have faced a high amount of retail theft, or what they call inventory shrink, since 2020 and have been implementing measures to eliminate those costly losses.

Among the most common measures used by Walmart, Target and some others has been locking up popular items behind glass cases to prevent shoplifting. Customers shopping at these stores have encountered a lot of their favorite products, such as cosmetics, shampoo, over-the-counter drugs and even laundry detergent locked up in those cases.

Related: Target limits self-checkout, makes a change customers will love

Shoppers need to either push a button near the product to alert a worker to unlock the case or, in some situations, run around the store looking for a worker with the proper key to open the case. It's a very inconvenient problem for shoppers, and not all stores are consistent with their lockup policies.

For example, one Walmart store might lock up some of their instant coffee products, while another cross-town Walmart location, or even a Target competitor, doesn't lock up any coffee.

Retail stores have also implemented new self-checkout rules to discourage inventory shrink, but again, stores are inconsistent with their rules. Walmart stores have a 20 items or less rule for their self-checkout lanes to try to steer shoppers with more items to checkout clerks that might help reduce the occurrence of theft. But neither customers, nor workers seem to be observing that rule. Target on March 17 implemented a new 10 items or fewer rule in its self-checkout lanes, but we'll see if anyone enforces it.

These self-checkout requirements are also supposed to speed up the checkout process, but that only works if all the self-check registers are working and an adequate amount of checkout clerks are working registers as well.

The next step for retailers in addressing inventory shrink at self-checkout would be to eliminate self-check altogether.

Five Below cuts back on self-checkout lanes 

After finishing the fourth quarter of 2023 with a "higher-than-planned shrink," or higher level of theft than expected in its stores, value retailer Five Below  (FIVE)  has implemented associate-assisted checkout in all of its stores for 2024, CEO Joel Anderson said on the company's earnings call on March 20.

"In addition, in our high-shrink stores, the primary option for checkout is more of the traditional, over-the-counter associate checkout," Anderson said. "We expect to have 75% of our transactions chain-wide assisted by an associate with a goal of 100% in our highest shrink, highest-risk stores to be fully transacted by an associate."

The retailer also checks receipts and adds guards

"Additionally, in those stores, we’re implementing further mitigation efforts, including receipt checking, additional store payroll and guards. We intend to measure progress as soon as Q2 when we perform a limited number of store counts," Anderson said.

Five Below tested several inventory shrink mitigation initiatives late in the third quarter and into the fourth quarter of 2023, which included product-related tests, front-end initiatives and guard programs, Anderson said in the earnings call. He said the most significant change the Philadelphia-based company made across most of the chain was to limit the number of self-checkout registers that were open, while positioning an associate upfront to further assist customers.

Anderson said he is confident the company's measures will help it over time, but the company has not included any financial impact for shrink reduction in its 2024 guidance. The company, however will aggressively pursue returning to pre-pandemic levels of shrink or offsetting the impact over the next few years, he said.

Read More

It's March Madness season — which alongside the Super Bowl — is one of the biggest sporting events in the U.S. But we're also just a few months away from the biggest sporting event in the entire world as the 2024 Summer Olympics Games in Paris start on July 26.

Olympics viewership has seen a pretty substantial dip in recent iterations, especially during the recent Tokyo Olympics that were delayed from 2020 to 2021 and marred by the Covid-19 pandemic.

NBC is paying a whopping $7.65 billion to broadcast the Olympics until 2032 — and while the game still has viewership in the tens of millions, it's clear that the network needs to find a way to bring back its audience to justify its investment.

Related: How you can attend the 2024 Paris Olympics in person

Over the last few days, the network has announced a few changes that could enhance the viewing experience in an effort to bring in more fans or have them watch the games for longer.

On Wednesday, Mar. 20, NBCUniversal  (CMCSA)  announced that it would be taking the "RedZone" style of programming made popular with the NFL and bring it to the Olympics. NBCUniversal's Peacock streaming service will offer the "Gold Zone," bringing a format that will move around the different events of Olympics during the most important times of an event.

The show will be hosted by Scott Hanson, Andrew Siciliano, Matt Iseman, and Akbar Gbajabiamila. Hanson and Siciliano are mainstays in the NFL Network's coverage of the football league, with the latter hosting the "RedZone Channel" on DirecTV for nearly two decades.

"Gold Zone" will be available on Peacock from 7 a.m. to 5 p.m. ET from July 26 to Aug. 10. NBCUniversal began streaming some events exclusively on Peacock during the last Summer Olympics — and it has continued to push its streaming platform for other live sporting events like a 2024 Wild Card NFL playoff game — so this move further shows the company's commitment to the service. 

Moreover, NBC also announced that it is going to have the Olympics Opening Ceremony on Friday, July 26 available for viewership at IMAX locations around the country.

This is the first time that the event will be presented on IMAX screens and will be available at 150 IMAX locations, according to the press release.

These two moves further showcase that NBC is looking to throw anything at the wall to maximize and unlock the value of the Olympics broadcasting rights.

Related: Caitlin Clark may already make the WNBA a lot more money before even going pro

Read More

Marco Del Negro, Pranay Gundam, Donggyu Lee, Ramya Nallamotu, and Brian Pacula

This post presents an update of the economic forecasts generated by the Federal Reserve Bank of New York’s dynamic stochastic general equilibrium (DSGE) model. We describe very briefly our forecast and its change since December 2023. As usual, we wish to remind our readers that the DSGE model forecast is not an official New York Fed forecast, but only an input to the Research staff’s overall forecasting process. For more information about the model and variables discussed here, see our DSGE model Q & A.

The New York Fed model forecasts use data released through 2023:Q4, augmented for 2024:Q1 with the median forecasts for real GDP growth and core PCE inflation from the January release of the Philadelphia Fed Survey of Professional Forecasters (SPF), as well as the yields on ten-year Treasury securities and Baa corporate bonds based on 2024:Q1 averages up to February 27. Starting in 2021:Q4, the expected federal funds rate (FFR) between one and six quarters into the future is restricted to equal the corresponding median point forecast from the latest available Survey of Primary Dealers (SPD) in the corresponding quarter. For the current projection, this is the January SPD.

Once again, the model was surprised by the strength of the economy. The model attributes this forecast error in part to higher-than-expected productivity, and in part to stimulative financial conditions. This positive surprise leads to a sizable upward revision of the output growth projections for 2024 relative to the December forecast (1.9 versus 1.2 percent).  Growth projections for the remainder of the forecast horizon are not very different from what they were in December (0.7, 0.5, and 1.0 percent in 2025, 2026, and 2027 versus 0.7, 0.9, and 1.5 percent in December, respectively). Inflation projections are slightly lower in 2024 than they were in December (2.0 versus 2.2 percent), mostly because 2023:Q4 inflation surprised the model on the downside (although we should note that the model did not take into account the January core PCE readings, as they were not yet incorporated in the February SPF nowcast). The expected path for inflation is otherwise essentially the same as in December (2.0, 2.1, and 2.2 percent in 2025, 2026, and 2027 versus 2.0, 2.0, and 2.1 percent in December, respectively).

The short-run real natural rate of interest is expected to remain at roughly the same elevated level as projected in December for 2024 (2.1 percent versus 2.2 percent in December), declining to 1.9 percent in 2025, 1.6 percent in 2026, and 1.4 percent in 2027. The expected path of the policy rate is essentially unchanged relative to December. The model continues to see policy as being restrictive through the end of 2024, with the real federal funds rate remaining above the short-term natural rate of interest.

Forecast Comparison

Forecasts of Output Growth

Source: Authors’ calculations.
Notes: These two panels depict output growth. In the top panel, the black line indicates actual data and the red line shows the model forecasts. The shaded areas mark the uncertainty associated with our forecasts at 50, 60, 70, 80, and 90 percent probability intervals. In the bottom panel, the blue line shows the current forecast (quarter-to-quarter, annualized), and the gray line shows the December 2023 forecast.

Forecasts of Inflation

Source: Authors’ calculations.
Notes: These two panels depict core personal consumption expenditures (PCE) inflation. In the top panel, the black line indicates actual data and the red line shows the model forecasts. The shaded areas mark the uncertainty associated with our forecasts at 50, 60, 70, 80, and 90 percent probability intervals. In the bottom panel, the blue line shows the current forecast (quarter-to-quarter, annualized), and the gray line shows the December 2023 forecast.

Real Natural Rate of Interest

Source: Authors’ calculations.
Notes: The black line shows the model’s mean estimate of the real natural rate of interest; the red line shows the model forecast of the real natural rate. The shaded area marks the uncertainty associated with the forecasts at 50, 60, 70, 80, and 90 percent probability intervals.

Pranay Gundam is a research analyst in the Bank’s Research and Statistics Group.

Ramya Nallamotu is a research analyst in the Bank’s Research and Statistics Group.

Brian Pacula is a research analyst in the Bank’s Research and Statistics Group.

How to cite this post:
Marco Del Negro, Pranay Gundam, Donggyu Lee, Ramya Nallamotu, and Brian Pacula, “The New York Fed DSGE Model Forecast—March 2024,” Federal Reserve Bank of New York Liberty Street Economics, March 22, 2024, https://libertystreeteconomics.newyorkfed.org/2024/03/the-new-york-fed-dsge-model-forecast-march-2024/.

You may also be interested in:

The New York Fed DSGE Model Forecast—December 2023

The New York Fed DSGE Model Perspective on the Lagged Effect of Monetary Policy

The Evolution of Short‑Run r* after the Pandemic

Read More