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    US retail spending, declining manufacturing as Omicron, surge in inflation

    US retail spending and manufacturing slowed at the end of 2021 due to a surge in Covid-19 Omicron variants and inflation, early on that the latest pandemic complications could weigh heavily on the economy. It is shown in.

    Sale at retail stores, online, restaurants 1.9% decrease, Weaken the end of the holiday shopping season, the Commerce Department said on Friday. The sharp drop in December followed record levels of retail sales, beginning with a 1.8% increase from the previous month to October.

    However, sales have increased significantly over the past year. Retail sales in December increased 16.9% year-on-year, marking the revival of consumer spending after the economy fully resumed. As vaccination spreads And government stimulus Filled the household with savings..

    The Federal Reserve has said that US industrial production has declined for the first time since September. Manufacturing production, a key factor in measurements, fell by 0.3% as supply chain issues continue to affect production.

    U.S. stocks There was a mixed screening Profit declined after lower-than-expected economic figures and bank earnings reports were released, with the Dow Jones Industrial Average falling and the S & P 500 and Nasdaq rising slightly.

    Many holiday shoppers have paid attention to warnings about shipping delays, boosting most of the season’s normal profits earlier this year. December sales fell sharply across spending categories, with online sales down 8.7%.

    Electronics stores were down 2.9% month-on-month in December, and furniture and home stores were down 5.5%. Restaurant and bar sales were down 0.8%.

    Ian Shepherdson, Chief Economist at Pantheon Macro Economics, said: “We expect sales to recover significantly once the Omicron wave subsides.”

    So far, consumer views on the economy have deteriorated. A consumer sentiment survey at the University of Michigan showed a decline on Friday, with inflation expectations rising from 2.9% reported in December to 3.1% over the next five years.

    Pandemic impacts (nearly two years), including supply restrictions and inflationary waves, according to economists Americans are suspending purchases..

    Retail sales have been adjusted for seasonal fluctuations, but not for inflation, so growth over the past year has been constrained by historically high inflation. Consumer price indexInflation’s key readings rose to 7% from a year ago to December, the highest level since 1982.

    The strong annual growth in 2021 reflects the torrent of consumer spending that continued following the previous year’s decline in sales during the worst economic period of the Covid-19 pandemic, despite the decline in December. According to economists, retailers are unlikely to grow at the same pace this year. Consumer savings have fallen from high levels, and Omicron variants have created fresh turmoil, keeping patrons away from restaurants and bars.

    Neil Saunders, Managing Director of Global Data Retail, said of the 2021 performance:

    According to economists, tight supply chains can result in extra products that some retailers want to sell during their holidays but don’t receive them in time. Another factor is that after the pandemic is finally mitigated, a further shift in goods-to-service spending is expected. During the pandemic, consumers spent more on goods, but service spending was below pre-pandemic levels. In November, the balance had begun before Omicron surged in the United States. Return to service, Commodity spending increased 0.1% and service spending increased 0.9%.

    Jerome Powell said in a second confirmation hearing as chairman of the Federal Reserve that central banks would use the tool to curb inflation. Photo: Graeme Jennings / Press Pool

    Several major retailers said this week that Omicron’s surge and supply chain disruptions weighed on holiday sales.

    Lululemon Athletica Ltd

    When

    Abercrombie & Fitch Ltd

    They said their sales would fall due to the turmoil.

    Calvin McDonald, CEO of Lululemon, said the company started the holiday season in a strong position, but Covid-19 limited the number of staff and encouraged the chain. Reduce business hours In some places. Abercrombie’s CEO Fran Horowitz said sales were hit by an unexpected shortage of inventories in key categories due to port and shipping delays.

    “With inventory, we should have been able to achieve sales within the previous range,” Horowitz said.

    Car sales fell 0.7%, but this may be more relevant Limited inventory at dealers Caused by supply chain disruptions and shortages of semiconductors.

    Adam Claucher, President of Lester Glenn Auto Group, New Jersey, said:

    Share your thoughts

    How has your spending changed in December this year? Join the conversation below.

    For Paula Humphrey, General Manager of Don’s Garden Shop in Colorado Springs, Colorado, supply chain issues have been both a boon and a challenge. She said sales at gardening centers have “exceeded” since the pandemic began, and many customers have a desire to grow their food to avoid food shortages and rising prices. I have listed it.

    Due to shipping delays, her business, founded by her husband Don Humphrey over 40 years ago, has adapted. They struggled to procure manufactured garden materials such as paving stones and fountains because of the high demand and the inability of paving stone suppliers to hire guest workers from Mexico as usual. ..

    “We have inventory this year, so we will have it,” Humphrey said. “Usually we don’t order paving stones in January.”

    Restaurants and bars are struggling to deal with the dual pain of falling service spending and high inflation.

    John Lincecum, co-founder of Boston’s Turtle Swamp Brewing, says the pandemic has hurt his cash flow.


    Photo:

    Brandon Johnson

    John Lincecum, co-founder of Turtle Swamp Brewing, a brewery and taproom in Boston’s Jamaica Plain district, said:

    Linsecam, who holds a PhD in biochemistry and has many years of experience applying for government research grants in his previous career as a researcher in amyotrophic lateral sclerosis, with the help of a loan from the Small Business Agency. The brewery was left open in the early stages of the pandemic and grants.

    While distribution deals with grocery stores such as Whole Foods Market and restaurants and bars around Massachusetts have helped build wholesalers’ businesses, he used cash flow from tap rooms to pay for regular business costs. Said it depends.

    As the number of cases of Covid-19 increased, patrons avoided eating and drinking directly, “there is no longer the ability to have weekly and monthly cash flow to pay utility bills and biweekly salaries,” he said. ..

    Turtle Swamp recently began delegating vaccines to customers two weeks before Boston’s city-wide mandate, but patrons will return with a strong number until the current wave of incidents subsides and the weather improves. He said it was unlikely.

    “The next six months will be decided-there is a wave of bankruptcy,” Lincecum said. “The little guys can’t keep it.”

    Write in Gabriel T. Rubin at gabriel.rubin@wsj.com

    Copyright © 2022 DowJones & Company, Inc. all rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

    US retail spending, declining manufacturing as Omicron, surge in inflation

    Source link US retail spending, declining manufacturing as Omicron, surge in inflation

    The post US retail spending, declining manufacturing as Omicron, surge in inflation appeared first on Eminetra.

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