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Economy
02 February
Seeing economic slowdown, Fed pulls back with 0.25% rate hike
With inflation cooling, Fed Chair Jerome Powell sees "a path" to bringing down inflation without a spike in unemployment.

Photo by Joshua Woroniecki on Unsplash
The Federal Reserve raised its benchmark interest rate by 0.25% on Wednesday. The move at once continued the central bank’s campaign to fight inflation by using its monetary policy tools, and at the same time marked a slowdown in rate hikes.
The 0.25% increase was below the 0.5% increase made in December, and well below the series of 0.75% hikes delivered throughout the latter half of 2022.
“Shifting to a slower pace will better allow the committee to assess the economy’s progress toward our goals as we determine the extent of future increases that will be required to attain a sufficiently restrictive stance,” Fed Chair Jerome Powell said.
For the consumer economy, rising interest rates carry with them the specter of a slowdown in demand. The casualty of falling prices is tougher decisions on spending for households. But in the long run, falling inflation will mean consumers are more willing to spend on discretionary purchases as they spend less on gas and food. The question is how long and deep the short-term period of pain will stretch.
For takeaways on what's next, here’s a look at what Powell said about the state of the economy, inflation, the Fed’s plans and more:
The economy: Signs of a slowdown, but job growth remains
After retailers reported consumer pullback and challenges to profitability in the recently-completed holiday season, there’s keen interest in how the Fed’s actions are affecting the economy. Powell indicated that the Fed’s actions are beginning to have an impact. He offered the following assessment:
The U.S. economy slowed significantly last year, with real GDP rising at a below-trend pace of 1 percent. Recent indicators point to modest growth of spending and production this quarter. Consumer spending appears to be expanding at a subdued pace, in part reflecting tighter financial conditions over the past year. Activity in the housing sector continues to weaken, largely reflecting higher mortgage rates. Higher interest rates and slower output growth also appear to be weighing on business fixed investment.
Despite the slowdown in growth, the labor market remains extremely tight, with the unemployment rate at a 50-year low, job vacancies still very high, and wage growth elevated…Although the pace of job gains has slowed over the course of the past year, and nominal wage growth has shown some signs of easing, the labor market continues to be out of balance.
As for this year, Powell said his assessment is that growth will continue in the economy in 2023, but at a “subdued level.”
Soft landing: Still possible
Can the Fed bring down inflation without seeing a significant economic slowdown that leads unemployment to rise?
That’s the question facing the central bank's key committee, and it is one that the central bank continues to wrestle with as it hikes rates. The labor market has continued to show strength even with the aggressive tightening over the last year, and that’s a key indicator of demand for goods. Powell still sees a possibility that there won’t be a significant recession.
“I think most forecasters would say that unemployment will probably rise a bit from here, but I still think…that there’s a path to getting inflation back down to 2% without a really significant economic decline or a significant increase in unemployment,” Powell said. “And that’s because…the setting we’re in is quite different.”
By different, he means that the pandemic-era supply and demand imbalance that was a major driver of inflation is unprecedented. In turn, there is little to repair the fallout from that rebalancing, as well.
Inflation: A start to price relief
The Fed sees signs of the disinflationary process starting, Powell said. In particular, goods inflation is coming down as supply chains move back into balance. But Powell said that the process of 40-year-high prices coming down is at an “early stage,” especially as inflation in services and housing continues to be elevated.
“The inflation data received over the past three months show a welcome reduction in the monthly pace of increases,” he said. “And while recent developments are encouraging, we will need substantially more evidence to be confident that inflation is on a sustained downward path.”
Rate increases: How high and how long?
Now that the Fed has slowed down, a key question is how much higher the interest rates will go, and when it will stop hiking rates altogether.
There was little hard evidence offered Wednesday. The Fed’s statement left existing language in place that it believed further increases were necessary. Powell fielded a variety of questions on the duration and size, but didn’t commit to any specific plan.
He reiterated what he has throughout this period: “The historical record cautions strongly against prematurely loosening policy. We will stay the course until the job is done.”
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Marketing
13 March
Best Buy will provide first-party data to Roku for streaming ads
Consumer electronics is a top retail media category.
Roku ads have more data behind them. (Courtesy photo)
Best Buy’s advertising capabilities are set to help power a streaming platform.
The news: Best Buy will provide its first-party advertising data to Roku for targeting and closed loop measurement. It means Best Buy’s year-old retail media network is now powering advertising beyond its own platform.
How it works: Best Buy and Roku said the goal is to make TV advertising “more relevant and performance-driven.”
The partners will provide targeting, optimization and measurement of ads on Roku that use shopper data from Best Buy. As a retailer, Best Buy has access to first party data at the purchase level, which can provide details about a shopper that signals their intent to buy certain products. That’s valuable to advertisers, who want to reach the consumers that are most likely to buy a product.
Not just ads: This is part of a wider partnership that will also feature a prominent place for Roku-branded TVs at Best Buy. This week,tThe two companies are partnering on an interactive popup at SXSW in Austin.
Key quote: “Our goal is to create a better TV experience for everyone,” saidJulian Mintz, co-head of U.S. brand sales for Roku Media. “We’re bringing together our entire business to build the future of entertainment and advertising — making the TV experience simpler, offering the right marketing, data, tech, and scale to drive real results, and helping win the entire streamer’s journey together with Best Buy.”
What it means for retail media:
Activating consumer electronics: While retail media is often considered the province of major CPG brands or Amazon sellers, consumer electronics are playing an outsize role in the early growth of this format. According to MediaRadar, this category accounted for 15% of retail media spend in 2022, leading all categories. That helps explain why Roku wants to add Best Buy’s data to the mix: Understanding intent in one of the most popular advertising categories can help better reach shoppers with those products.
Going offsite: The partnership shows how retail media is extending beyond retailers’ own marketplaces. The first-party data being used by Roku is a valuable asset to the streaming platform’s advertising effectiveness. First-party data has been understood to operate within a “walled garden,” where data owned by a retailer can only be used in their store. This partnership shows how technology is quickly climbing over that barrier. Importantly, brands and platforms will have to keep privacy in mind as more of these partnerships take hold.
Consider privacy: One major catalyst for the growth of retail media was privacy-oriented changes to third party tools, notably the Apple App Tracking Transparency changes that dealt a blow to Facebook's vaunted attribution engine. To become a lasting marketing channel, retail media can’t simply repeat the same tactics that brought so much scrutiny in the past, or recent history indicates it will repeat the same fate as advertising on the open internet.
Streaming ahead: Roku’s involvement underscores a key growth area for advertising: Streaming platforms. Called Connected TV, or CTV, streaming offers a form of TV advertising that reaches people while they are on their couch and passively watching content in a pastime that is familiar to most Americans, while also bringing in the targeting and measurement capabilities of the internet. Best Buy’s partnership with Roku shows that there is room not only for retailers to advertise products in that equation, but also to leverage data that is at the heart of a whole new business model.
Further reading: Roku has been on the forefront of combining commerce and media. It has also recently partnered with Walmart and DoorDash to create shoppable ads that allow consumers to order items using their remote.
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