Economist Anticipates Early and In-store Buying This Holiday Season
While the U.S. economy will experience a strong holiday buying season, Creighton University economics professor Ernie Goss, Ph.D., expects that consumers will see higher prices, fewer bargains and a lack of in-demand products due to supply chain disruptions, worker shortages and soaring inflationary pressures.
Goss produces two monthly economic surveys at Creighton—the Mid-America Business Conditions Index of manufacturing supply managers in nine states and the Rural Mainstreet Index of financial institution CEOs in rural areas of 10 states.Based on survey economic indicators, he has identified trends that will impact shoppers this holiday season.
Strong retail growth but high inflation due to supply chain bottlenecks – Stores within the Mid-America and Rural Mainstreet regions are expected to see strong sales this season, with growth rising up to 10% from last year. Unfortunately for retailers, approximately 5% of the increase in net sales is due to inflation caused by supply chain bottlenecks and labor shortages. These supply chain bottleneck disruptions are related to transportation delays and truck driver shortages. In response, 30% of supply managers reported intentional hoarding or stockpiling of inventories to reduce the risks of the supply chain disruptions.
Hiring headaches impact the shopping experience – The second most important factor restraining the U.S. economy is a hiring shortage. As a result, shoppers can expect to encounter longer checkout lines and less customer service assistance – something that hasn’t been seen in decades.
More consumers will shop in-store instead of online – While online shopping increased last year due to the COVID-19 pandemic, many consumers will shop in-store to avoid transportation delays that could cause their holiday gifts to arrive late. Consumers also are more likely to shop local than previous seasons because of rising fuel prices. However, with many business closures, shoppers will have fewer retail options, particularly outside of metropolitan areas.
Less bargains and empty shelves ‒ Consumers will see fewer deals this holiday shopping season due to hiring shortages, supply chain disruptions and surging inflation rates. Consumers who shop earlier will be more likely to encounter deals than last-minute shoppers.
More cash to spend – With two federal stimulus programs and an unprecedented Federal Reserve expansion, consumers will likely increase their cash-to-credit ratio this holiday shopping season, resulting from shoppers having a significantly larger cash cushion than in 2020.
Holiday travel – With less travel restrictions this year, individual and family travel are expected to increase. More people will be driving to their destination instead of flying due to fears of flight delays and cancellations across the country because of current hiring shortages. Business travel will remain weak.
For more economic insights from Goss, visit https://www.creighton.edu/economicoutlook/.