🛝 The childcare cliff

No gold-star stickers… $24B in federal childcare funding is set to expire on Saturday. During the pandemic, the US gov’t doled out the grant $$ to 220K+ childcare centers to help them stay afloat. When the funding runs dry, 70K centers caring for 3M kids could close. Scholarships for daycare tuition are disappearing, too, leaving families with fewer and more expensive options.

• No-go: A push for $16B in extra funding isn’t likely to succeed anytime soon, as childcare measures struggle to win bipartisan support.

Livin’ on the edge… of what’s being called a childcare “cliff.” The tots-watching industry lost workers when people stayed home during the pandemic, and is still down by 65K jobs compared to early 2020. The workers that centers do find are asking for higher wages (it’s a hot labor market rn). But to meet higher-wage demands, center leaders say they’d have to raise tuition beyond what parents could afford. 

• The average cost of pre-K and daycare has already risen 6% this year, outpacing inflation. US families spend, on average, about a quarter of their income on childcare, with preschool costs hitting thousands of $$ a month in cities like NYC.

• Faced with fewer options, parents may leave the workforce to care for their kids themselves. Early in the pandemic, lots of caregivers — mostly mothers — made that trade-off once schools and daycares closed. Women’s labor-force participation has since rebounded to record levels, but another mass exodus could reverse the gains.

The plot thickens… Famous authors are piling into copyright-infringement lawsuits against OpenAI. George R.R. Martin, John Grisham, Elin Hilderbrand, and others sued the ChatGPT maker last week, accusing it of illegally using their books to train its bot. In July, Sarah Silverman and others sued OpenAI and Meta for the same reason. If authors win, OpenAI might have to pay damages and a licensing fee for copyrighted work. Artists have also brought suits against genAI companies. Not so coincidentally: OpenAI recently released an update to its image generator, DALL-E, which allows artists to opt out of having their work used in training.

It takes a village… Retailers are stocking up on help this holiday szn. Last week Target said it would hire 100K extra employees as it preps for more curbside orders and in-store returns. Amazon (the US’s #2 largest private employer after Walmart) is taking on 250K+ more workers (100K more than last year) and raising wages as it ramps up next-day deliveries. Still, holiday hiring is expected to be the lowest since 2008, and 76% of US adults say they plan to cut back on splurges (picture: fewer life-size reindeer statues, no bourbon eggnog).

Just doin’ it… Nike reports Thursday, after posting its first earnings miss in three years in the previous quarter. Inventory glut, up 23% since 2021, has been a stone in Nike’s shoe. The swoosh icon has been dialing back its direct-to-consumer biz and repairing relationships with wholesale partners like Foot Locker and Macy’s, hoping to clear out some excess sneakers. Analysts aren’t expecting much as US retail spending weakens, but Nike’s hoping its powerful brands (like the $6.6B Jordan line) can step up demand.

A rollin’ throne… Premium-furniture maker MillerKnoll, which owns brands like Herman Miller and Design Within Reach, took a hit during the pandemic when its ergonomic chairs were sitting empty. As unsold Aerons filled warehouses, MillerKnoll’s sales (and stock) sank. In major American cities the office-occupancy rate has remained below 50% since last year, but a renewed RTO push may boost orders (FYI: 90% of US cos say they’ll require some in-office days by next year). We’ll see whether MillerKnoll is beating its Covid hangover when it reports tomorrow.

• FossilFeud: California sued Exxon, Shell, Chevron, ConocoPhillips, and BP, saying they downplayed fossil-fuel risks. The Golden State wants the oil titans to help pay for increasingly common climate disasters.

• FeeReturns: H&M has joined a cascade of retailers like Kohl’s, TJ Maxx, and JCPenney in charging customers for returns. With its $6 online return fee, H&M hopes to discourage bulk buy-and-returns as shipping costs soar.

• Thrill: Disney plans to nearly 2X its spending on its parks-and-cruises biz with $60B in investments over the next decade. As Disney’s media divisions struggle, its OG parks biz is still bringing the magic.

• Unscripted: With Hollywood in a strike standstill, fall TV lineups are filled with game shows, reality TV, and reruns of old faves like “Law & Order.” Also on: UK versions of popular sitcoms like “Ghosts.” 

• Stuck: 45% of US adults age 18 to 29 are now living with family. Moving back in with the ’rents is viewed as pragmatic, providing a financial cushion as housing affordability sits at an all-time low.

• Swipe: Credit-card rates (aka: APYs) hit a record 20.7% last week, adding to the financial strain already faced by millions of Americans. This year total US credit-card debt topped $1T for the first time.

• Monday: Yom Kippur. Earnings expected from Thor Industries

• Tuesday: Consumer-confidence report. Earnings expected from Costco, Cintas, and MillerKnoll 

• Wednesday: Earnings expected from Paychex, Duckhorn Portfolio, and Micron

• Thursday: Fed Chair Powell speaks. Earnings expected from Nike, CarMax, and Accenture

• Friday: Earnings expected from Carnival

Authors of this Snacks own shares of: Amazon, Disney, Exxon, and Walmart

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