Heat Wave Threatens Holiday Weekend Festivities; NYC Faces Hottest Day Since 2012

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1:54that moves the business. Let's create smarter business. IBM. Bloomberg Audio Studios. Podcasts, radio, news. This is Bloomberg Business Week Daily. Reporting from the magazine that helps global leaders stay ahead. With insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. The Bloomberg Business Week Daily Podcast with Carol Masser and Tim Stenebeck on Bloomberg Radio. Power prices from New York to Virginia surging as sweltering heat threatens to overwhelm U.S. grids and up-end travel for the Independence Day holiday.

2:38We just talked about some of the outages that are happening in parts of New York. This dangerous heat wave that is trapping over New York City is also trapping people in the city. For more, I want to bring in Lauren Rosenthal, Bloomberg News weather reporter. She joins us from New York. You know, you go to your bio page on the Bloomberg Terminal and you've written so much about this heat wave just in the last couple of days, Lauren. First, I just want to start with an update on what we're hearing from Con Ed, the utility provider here in the city, and then broaden out the conversation to a little bit more about the Northeast.

3:07So we did hear that some places in the northern part of the city were without power. What's the latest? Yeah, there were some cuts to homes in the Riverdale neighborhood up in the Bronx while crews work on repairs. And the company's also asked about 89 ,000 customers in the surrounding area, in City Island, some other parts of the city to cut back on power use. So don't run washers or dryers. Try to limit air conditioner use where possible. So if you have multiple units, like just run one and turn up the thermostat if you can to reduce stress on the system while they make repairs and try to shore up equipment to get through the heat wave.

3:45Are we supposed to be doing that everywhere, Lauren, or just in the areas that are? New York City is under what's called a heat emergency, which means the official advice from city officials is to turn up the thermostat on your cooling system to 78 degrees. That's if you're a home. That's if you're a business. We'll see how many people actually comply. Understandably so. I feel like there's some Nobel Prize winning economics paper that could be written about this. It has to be. Are individuals actually going to make the cuts for the community? I mean, I'm walking around outside. I have my phone in my hand and my phone's just on fire, just simply from the heat.

4:23Not yet saying it's too hot to use. You know, that ever happens where the. It starts putting off an alert. Yeah. Well, no, the temperature says like you have to lower the temperature of the screen says you have to lower the temperature of this phone in order to actually use it. Yeah. It's just insane. But Lauren, tell us, I think that this could be the hottest day ever that we're about to see, but tell us how this is, how it's been historically. Yeah. Yeah, so New York is seeing its hottest day measured in Central Park since 2012. We're probably going to come in shy of the all-time record, but it is for sure the hottest it's been in recent memory, indeed, in more than a decade.

4:59There are some parts of the country closer to the Washington, D.C. area. Actually, heat and humidity are more intense, believe it or not. And we are getting close to some records around the Washington Reagan International Airport. But for the most part, you know, we're looking at temperatures above 100 degrees for a really large swath of the East Coast, not just today, but also tomorrow and cooling off slightly for the Fourth of July holiday. But honestly, not by much. Heat dome is the responsible party for this. What is a heat dome and why do I keep hearing about these heat domes? Yeah, I mean, it's kind of what it sounds like.

5:34Imagine if you're getting room service, one of those silver dome trays that traps the heat in and keeps your food warm. There is a high pressure system that's gotten stuck over the eastern U.S. And it's essentially trapping warm air close to the surface. We do have a cold front that's on its way coming east. It can cause potentially some severe thunderstorms and it may ease the heat a bit in the coming days. Looking ahead into next week, cooler temperatures are on the way for the East Coast. We will be a little bit closer to what's considered normal for this time of year. Why do we also get these air quality alerts when temperatures are so high?

6:11Yeah, a lovely mix of intense sunlight and urban pollution. The sun reacts with compounds in exhaust, in emissions from buildings, and can increase concentrations of what's called ground level ozone. So if you step outside in the summer and it kind of smells like batteries, that's ozone. It's not great to breathe in, particularly if you have asthma or you're working outside for an extended period of time. This is just a nice way to start the show. It's a nightmare. I'm not looking forward. I mean, so what should people be doing? You mentioned that if you're staying inside, setting your AC to about 78 degrees, that's what Mom Donnie is suggesting.

6:52What should you be thinking about in terms of precautions if you do end up having to be outside during this weekend? Really limit your time in direct sun if you can. Take breaks in a cooled space. Watch your fluid consumption. Drink more than you think you might need. And not just water, but also try to replenish your electrolytes. So sports drinks, coconut water, those kinds of things. But for the most part, don't push yourself. Try not to overexert yourself. Really be mindful. Like the heat is no joke. And intense sun, cloudless skies can make it a little bit worse. This is not Lauren Rosenthal's first heat dome.

7:25I can tell. She knows her way around the heat dump. She's seen a few things. Power prices, Lauren. I want to broaden this conversation out to other parts of the Northeast. PJM interconnection. This is, it's something we talk about whenever we're talking about demand or supply of electricity or even grids. What are we going to see when it comes to prices and in which parts of the country? Yeah, so prices are likely to spike and indeed already have system-wide. PJM serves the Mid-Atlantic. So we're talking about the Washington, D.C. area, parts of Virginia, into the Carolinas. We have already seen prices elevate.

8:05We were close to$2 ,000 yesterday evening as temperatures started to climb and we hit the hottest part of the day. Folks got home from work and cranked up their air conditioners. Prices can go even higher in the Dominion portion of the grid. So this is a part of northern Virginia, the home to Data Center Alley. Large concentrations of data centers, big industrial users. The demand for power is high. The system is operating in a low-level grid emergency. They've gotten permission from the U.S. Department of Energy to sort of crank equipment to its limit, max out generation, sidestep emissions standards and environmental standards as needed in the process.

8:43But, you know, things are tight and will continue to be. The system is getting close to an all-time demand record. We'll see if they actually get there. Wow. Well, Lauren, what can people do to save a buck or two? I feel like there's always this debate as to whether or not you leave your AC on all day long or turn it off and turn it back on. Same with the lights in your house in this moment. Is there any sort of way you should be thinking about using your air conditioning system as to not maybe see as high as an electric bill as leaving it all day? Yeah, officials always like to say, you know, you'll hit a point where you may crank down the temperature on the thermostat as low as it will go.

9:20But the heat in your in your apartment or home just won't break. that's a sign you should probably crank that thermostat back up reduces strain on the grid reduces your power usage you know eventually in the overnight hours temperatures will come down a little bit granted not as much as most of us would probably like uh but cranking up your air conditioner in a desperate attempt to cool your space honestly probably won't help that much all right before we let you go carol and i were in las vegas a couple weeks ago it was 114 degrees And it wasn't that bad because the humidity isn't there. Why is this so much worse at 100 degrees in New York?

9:59Oh, man. Well, humidity makes hot weather feel hotter. You're out there in the desert. It's nice and arid, not a lot of the ambient moisture. We have a lot more water in the eastern U.S. Also, as the climate changes due to human activity, the air is capable of holding more moisture. so we can get more of these kind of soggy, oppressive days. And unfortunately, it does make things feel hotter. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

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12:40Visit store or BoostMobile.com for details. You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app. Or watch us live on YouTube. Well, also happening around the country, the 4th of July. And with the 4th of July comes the barbecue. U.S. ground beef prices have surged to all-time highs as the domestic cattle herd shrinks to a 75-year low. So the cost of meat has been a point of concern for the Trump administration ahead of the midterm elections. The president has encouraged more imports from countries like Argentina to cool prices.

13:18Foreign shipments are projected to reach a record this year. The big question for a lot of consumers going into holiday weekend is how much is that Fourth of July barbecue going to cost? Robin Winslow thinks about food prices nonstop. It's her job. She's head of the Wells Fargo Agri-Food Institute. She joins us from Minneapolis. So you and the team out with some research. Robin, it says the summer barbecue for 10 people will cost about$161. That's for a pretty big menu. It's for food. It's for beverages. Yet that's still up 2.4 % from last year. What are the other distinctions that you noticed with this year versus last year?

13:52Yeah, well, I think you called it right out of the gate. We are seeing meat and proteins really rise year over year, specifically when we talk about ground beef, which is up about 14%. As you noted, we are at record low supplies, dating back almost 75 years. So that's really causing some stress with the budget. We do see a little bit of relief and better news with chicken breasts. It's a good lean protein that's up about 3%. Pork ribs are another option. Again, up about 3%, but really good and convenient when feeding a crowd. Well, is there any area where we've seen that shoppers are getting some relief?

14:29We've been seeing prices going up nonstop, as we clearly are seeing through some of your reports. You know, it's a little bit of a mixed bag. Two areas that I can highlight would be desserts. Sugar prices have stabilized. So we're seeing cookies, ice cream, both up just only 1 % year over year. I'd almost call it flat. Pies, especially, you know, in the bakery area, again, up just about 4%. But I think that lowering of the sugar cost is helping out in the bakery aisles. Another area I'd point out would be fruit. And, you know, the best way that you can find value in fruit is to really purchase whatever is seasonal.

15:06So there are some good options there. Watermelon being one, it's down about 3%. And then berries are a mixed bag, but you can probably find some value in savings there as well. Well, your report is called Stay Close, Grill Big. Are families choosing backyard gatherings as opposed to travel at all because of affordability? We are seeing more people opting to stay closer to home. And with that comes the bigger crowds. You have hopefully some more family around and friends to join you. And that's really kind of what we took into account with our menu and our planning, really thinking about feeding that crowd.

15:41We spoke to Marta Norton over at Empower earlier. I mentioned that the CME group is launching trading contracts for the beef products that are used in hamburgers and meatballs as prices surge amid a shrinking U.S. cattle herd. As we mentioned, too, at the top of this, there are political implications of that, kind of both ways for the president. One is you want to satisfy the farmers without alienating them by allowing for cheaper imports, but you also want to make sure that the folks who aren't the farmers and are paying for this stuff at the grocery store aren't seeing prices rise too dramatically.

16:09Is there relief on the horizon specifically when it comes to beef prices? You know, in truth, it is going to take some time. Rebuilding the herds is not an overnight process, as you can imagine. It can take two to three years to get the caps up and ready. So we do expect to see some relief, but not until 2027, perhaps, as the herds start to come back up. What about the screwworm part of the equation here? Yeah, so the screwworm is back in the United States. It's really in the southern states. We're keeping an eye on that. At this point, we do not see that that is really disrupting beef supply or having any issue on pricing.

16:49Why do you argue in your report that ribs are taking center stage? You know, pork prices have been relatively stable, especially relative to, you know, red meat and chicken. And again, it's an option where it can be easy to feed a crowd with some of the different cuts of pork where you can really find some good value. Well, also, you know, how are you thinking about just not this holiday season, but what this means for grocery prices down the road as we're looking into the second half of the year. The grocery prices have really followed the food at home information that we're seeing coming out of the BLS.

17:27And we see that it's moderating compared to some of the increases that we saw in the past, certainly tracking back to COVID. So there's good news that the increases are not as big as they had been, but still it is costing more. I will say, you know, that when we talk about produce, fruits, vegetables, any commodities like that, it's really a function of supply and demand. The pricing is a function of supply and demand. And so with beef, we see the prices high because the supply is low. I think as we get into the growing seasons and more options are available and hopefully increasing some of the supplies, maybe those prices could moderate a bit.

18:04We're speaking with Robin Wenzel, head of the Wells Fargo Agri-Food Institute. She joins us from Minneapolis this afternoon. One of the conversations that we had over the last couple of months has been the cost of transporting the products that we buy at the grocery store, and specifically when it comes to produce and getting, let's say, some produce from California to the East Coast, maybe not as important this time of the year. But the increase in diesel prices that we saw in the earlier part of this year really affecting those prices. Given that we haven't seen gas prices come down the way we have seen oil prices come down.

18:39Is that still a big share of increase in costs when you're at the grocery store? You know, for the produce and for this transportation, those costs are built in. It can take some time to see that come down in the pricing. We, you know, throughout history, we see diesel prices go up and go down. And so it does moderate within the fresh produce. It doesn't always tend to be to as great a degree as we would think, although of recent, you know, we are seeing some impact. But we do hope that that will, again, start to moderate and trend down at some point. When should that trend back to pre-war levels?

19:17I don't have the answer to that. I would like to have that answer. But I think it is going to take a bit of time, as we can imagine, to kind of work through inventories and have it right size a little bit. Well, Robin, outside of beef, where else are you really seeing consumers being crunched in this moment? Earlier, we were just talking about Buy Now, Pay Later on one of our earlier shows on Bloomberg TV and how so many consumers are trying to find ways just to finance the essentials. Don't know if we consider Fourth of July backyard grilling an essential, if you will. But curious, where else are you really seeing consumers essentially trading down?

19:53You know, with beverages, that's one of the areas. Certainly, we've seen kind of, you know, alcohol beverages flat. They're up about 1 % in price. But we are seeing consumers trying to find other options out there. Part of it is consumer taste and preference, people looking for low sugar, low alcohol, no alcohol options, and, you know, switching to the sparkling waters and some of the other beverages. I would also say that, you know, dried goods, those pantry items tend to be effective with cost savings for consumers versus a lot of the fresh produce and proteins. Are we ever or are we at this point, Robin, seeing any macroeconomic effects as a result of GLP ones?

20:33There was there was so much talk a couple of years ago. You know, there were folks out there saying this is going to be a boon for airlines because if everybody weighs less, they're not going to have to spend as much on fuel. Certainly, we've seen some CPG companies change up their formulations and add protein. And we've seen portion size commentary from companies. What are you seeing in your world? We are seeing a shift in consumers' habits and their purchases at the grocery store. So we do see people trying to lean in on the outer aisle. Again, the fresh produce and protein when they're on GLP-1s, avoiding a lot of the processed foods, the sugary foods.

21:08So we see some changes there. Protein and fiber are the two winners from the GLP conversation. That's really where a lot of the consumers and people taking GLP-1s are focused with their nutrition, with their diet, and finding ways to supplement and add that to their to their menu. But what types of proteins and what types of proteins? Yeah, lean proteins. So your fish, your chicken, all of those. I'm really trying to pack it in. Also looking at dairy. Dairy's been a great source for protein. We've seen pottage cheese just explode in popularity. A lot of the yogurts. So that's an area in addition to a lot of the protein shakes that we see.

21:48And, you know, with Fiverr, it's getting those fruits and vegetables in there, getting some of the whole grains in there and then certainly adding to it all with supplements. Are you seeing at all shoppers maybe going toward canned goods as opposed to maybe fresh produce or fruits? When we think about the produce section, are you seeing people maybe trading down from a brand name to Walmart's great value? People are prioritizing, you know, making their budget stretch. And that is certainly a way to do it. So working with private label, working with more of the dry goods, the canned goods, there's value there.

22:21And certainly a lot of the retailers are incentivizing people to shop in that area as well with some of the specials. So it is a constructive way to make your budget stretch further. You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app. Or watch us live on YouTube. Dave Hoffman would certainly say that's the solution. He's the CEO of the indoor trampoline park Sky Zone. Hundreds of locations around the U.S. and they are growing and building more. He joins us from Dallas.

22:57Dave, good to have you on the program. You've got a great background, includes Dunkin', McDonald's and more. You have a history in franchise business as well. For those who haven't been to a Sky Zone, describe the experience and who it's for. Yeah, and look, we are the leader in active and social play. And like you said, we've got actually nearly 300 locations. We're focused on, and I don't know if people know this, but we're focused on kids 6 to 14. In a particular park, if you can kind of imagine this, just think they're 40 ,000 square foot boxes, so quite large. We'll have 20 to 25 attractions in that indoor park.

23:35And like you said, Tim, while we're known for trampolines, we've got everything in there now from dodgeball courts, which are amazing, ninja courses, multi-story mega slides, basketball and soccer courts, zip lines, you name it. We've got a lot going on in there. And really our thesis here or what we're trying to do is we're all about active and social play. And we feel both of those are important, social in today's environment, especially in a post-COVID world and everything that's going on with technology. We want to be the place where kids can come, build confidence, burn off energy with their friends.

24:10And so everything we're doing is about the power at play. Well, Dave, I can imagine that this must be one of the biggest seasons for you all, being that it's summer vacation season for all the students, all the kids. What's it been like for you all as of late? Yeah, I think, you know, as an operator for 30 plus years, as you mentioned up front, I think you're always looking for attention in the marketplace. and how you can solve that tension for the consumer. And so, look, nothing new. Just would you guys continue to report on here? The tension for our offering would be, you know, the consumer's wallet is under pressure.