The holiday season poses a major test for Biden’s economy

This week’s Black Friday will start a crucial stretch for President BidenJoe BidenBiden will speak on the economy on Tuesday, with the Fed election looming, the NAACP chair calling Rittenhouse’s verdict ‘a warning shot that vigilante justice is allowed’ Optimistic Democrats as the bill from social spending goes to the Senate MORE as the US economy struggles to shake off the limits of the coronavirus pandemic.

COVID-19 stifled the regular economic momentum of the holiday season in 2020, but retailers and manufacturers are bracing for an increase in shopping and travel after three straight months of mounting pressure on supply lines.

Retail sales minus cars and gasoline during Thanksgiving week are expected to increase 10 percent from last year and 12.2 percent from 2019, according to Mastercard data. The credit card company projects a 56 percent increase in apparel sales, a 40.2 percent increase in department store sales, about 30 percent more spending on electronics, and an increase of almost 40 percent in jewelry sales over the same period last year.

“The holiday lights are shining brightly for retailers this year,” said Steve Sadove, Mastercard Senior Advisor and former CEO and President of Saks Incorporated. Sadove added that the current backlog of popular products will make Black Friday deals much less generous than before the pandemic.

“The consumer is strong and spends. With discounts in short supply, product innovation, availability and sustainability will be deciding factors for consumers eager to cross off their holiday shopping lists, ”he said.

Mastercard also expects online retail spending to rise 7.1 percent from last year and a staggering 50.2 percent from Thanksgiving week 2019, a major test for shipping companies that are already overloaded.

The stakes are high for Biden, and Republicans are more than willing to accuse him of ruining the vacation. While many other nations are struggling with high inflation with much higher unemployment than the United States, high prices have hurt Biden’s approval with less than a year to go before the midterm elections.

The holiday shopping fever is also a key factor in growth. About two-thirds of the U.S. gross domestic product (GDP) comes from consumer spending, and some economists have warned that a limited supply retail sector could hurt.

Goldman Sachs economists expect Christmas sales to fall 0.5 to 1.8 percent this year when adjusted for inflation due to supply bottlenecks, which they said could lower the growth rate. of the fourth quarter by up to one percentage point.

“Foreign production of non-chip-intensive consumer goods has increased, and our current forecast suggests sufficient supply to meet holiday demand without further inventory drops. But with increased shipping times and concerns about port congestion and a shortage of trucks, will these products arrive on time? “wrote Goldman economist Spencer Hill.

The White House has touted data to allay those concerns, mentioning that Walmart, Target, BestBuy and TJ Maxx are fully equipped. This week he shared data on the progress of the transportation supply chain, including that as of Monday, 87,000 long-duration containers were waiting at the ports of Los Angeles and Long Beach, 32 percent less than on Nov. 1.

In addition, 849,000 imports arrived at those ports in October, up 16 percent from a previous peak in 2018. US retail inventories were at $ 456 billion at the end of September, up 4 percent from the same period last year.

“Americans should feel good about the progress that is being made to address these disruptions and also ensure that the shelves are stocked in these large retail stores across the country,” said the White House press secretary. Jen psakiJen PsakiEconomist Advises Americans to ‘Wait’ for Non-Urgent Purchases Amid Supply Chain Crisis Democrats Frustrated Over Government-Wide Vacancies White House Calls for Investigation into Tennis Star’s Sexual Assault Allegations Chinese disappeared MORE he said Thursday.

Retailers have struggled for months to rebuild inventories as consumer demand rebounded from the pandemic much faster than factories and shipping companies could handle. The emergence of the delta variant in late July also diverted increased demand for services onto goods, as ports and factories faced new closures.

The result: shortages, shipping delays and higher prices driven by a complex mix of global problems, said Scott Paul, president and CEO of the Alliance for American Manufacturing.

“There are a lot of different variables,” Paul said. “Is shipping a limitation? Are materials a limitation? Or is it simply that people want things faster than is possible with all the resources to make this happen? “

Paul said that while not all buyers will find exactly what they are looking for in time, especially if they are looking for cars or trucks, “things are getting better day by day and week by week, so I think the hype will outweigh the effect.”

“There are many cases where I think both manufacturers and retailers are trying to get the most out of this, and I have to imagine that there will be much less consumer disappointment than one might anticipate,” he continued.

The business group of major retailers, the Retail Industry Leaders Association (RILA), expressed optimism for the holiday shopping season.

“Supply chain disruptions and talent shortages are problematic, but if any muscle has shown itself in the last two years, it is resilience. Leading retailers are working around the clock to make sure they meet customer demands this holiday season and look forward to fully meeting their customers, ”said Michael Hanson, RILA’s senior executive vice president of public affairs.

Hanson said the Biden administration could do more to ease supply chain congestion, such as addressing dislocation of containers for return and committing to data infrastructure standards for visibility and planning at ports.

Republicans have argued that Biden, in particular, has made the worker shortage worse with his vaccine or testing mandate for companies with 100 or more employees, which has a Jan.4 deadline for companies to comply, but faces legal challenges. .

More than 40 Republican senators earlier this month formally mobilized to disapprove and overturn Biden’s term.

Amid a labor shortage, a supply chain crisis and on the brink of the holiday season, President Biden should be working to help private companies recover from the pandemic. Instead, he is trying to force the government to make what should be a personal health decision between the people and their doctors, ”the Senator said. Cynthia lummisCynthia Marie LummisOn The Money – Biden Closes Infrastructure Week Senate Republicans Call On Colleagues To Reject Government Spending Bills Without Border Wall Funding Senate Republicans Express Concern Over TSA Cyber ​​Directives for rail and aviation MORE (R-Wyo.) He said at the time.

About 700,000 additional workers will be needed in the retail industry this holiday season due to the typical need for additional workers and current staff shortages in retail, according to projections from the National Retail Federation (NRF).

“It certainly is real,” said David French, senior vice president of government relations at NRF, when asked about the worker shortage.

“All of our members are reporting challenges in hiring, some of the larger members have accelerated salary increases and bonuses. It’s a challenge, ”he said, adding that HR departments have to build the systems to fulfill the mandate and at the same time handle the hiring of people.

The White House has argued that the vast majority of companies are not concerned that they will have trouble retaining workers because of the mandate, arguing that it will mean more certainty for companies and make people feel safe entering work.

The Occupational Safety and Health Administration said it would suspend enforcement of the business mandate after a federal appeals court reaffirmed its decision to suspend the mandate. But the White House continues to urge big business to keep going.

“Our message to businesses at this time is to move forward with measures that will make their workplaces safer and protect their workforce from COVID-19,” Psaki said this week.



Reference-thehill.com

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