Black Friday this week will be a crucial start for President BidenJoe BidenBiden speaks in the business world on Tuesday, with the Fed pick imminent as the U.S. economy struggles to shake off the borders of the coronavirus pandemic.
COVID-19 stifled the regular 2020 Christmas boom, but retailers and manufacturers are preparing for a surge in purchases and travel after three months of growing pressure on delivery lines.
According to data from Mastercard, retail sales, excluding cars and gasoline, are projected to increase 10 percent year over year and 12.2 percent over 2019 during Thanksgiving week. The credit card company predicts apparel sales will grow 56 percent, department store sales 40.2 percent, electronics spending about 30 percent, and jewelry sales nearly 40 percent higher year-over-year.
“This year the Christmas lights are shining brightly for retailers,” said Steve Sadove, senior advisor to Mastercard and former CEO and chairman of Saks Incorporated. Sadove added that the persistent backlog in popular merchandise will make Black Friday deals far less generous than they were before the pandemic.
âThe consumer is strong and consumes. With discounts tight, product innovation, availability and sustainability will be key factors for consumers looking to cross their Christmas shopping lists, âhe said.
Mastercard also expects online retail spending to grow 7.1 percent year over year and a staggering 50.2 percent from Thanksgiving week of 2019, a major test for the already congested shipping lines.
Much is at stake politically for Biden, and the Republicans are more than ready to blame him for ruining the holidays. While many other nations are grappling with high inflation and much higher unemployment than the US, high prices hurt Biden’s approval less than a year before the midterm elections.
The Christmas shopping rush is also an important growth driver. About two-thirds of US gross domestic product (GDP) comes from consumer spending, and some economists have warned that a restricted supply retail sector could sting.
The economists at Goldman Sachs anticipate that Christmas sales this year will fall by 0.5 to 1.8 percent adjusted for inflation due to supply bottlenecks, which could reduce the growth rate in the fourth quarter by up to 1 percentage point.
âForeign production of non-chip intensive consumer goods is up and our nowcast suggests sufficient supply to meet vacation demand without further de-stocking. But with increasing shipping times and concerns about port congestion and truck bottlenecks, will these products arrive on time? âWrote Goldman economist Spencer Hill.
The White House has touted data to allay those concerns, mentioning that Walmart, Target, BestBuy and TJ Maxx are all in stock. It shared data on the progress of the transportation supply chain this week, including the fact that 87,000 long-life containers were waiting in the ports of Los Angeles and Long Beach last Monday, 32 percent fewer than on Nov. 1.
In addition, 849,000 imports arrived at these ports in October, 16 percent more than an earlier high in 2018. US retail inventories at the end of September were $ 456 billion, 4 percent more than at the same time last year.
“Americans should be pleased with the progress that is being made in addressing these disruptions and also making sure the shelves in these major retail stores across the country are full,” said the White House press secretary Jen PsakiJen PsakiEconomist advises Americans to “wait” on non-urgent purchases amid supply chain crisis to Democrats frustrated with government vacancies The White House calls for an investigation into allegations of sexual assault by missing Chinese tennis star MORE said on Thursday.
Retailers struggled for months to rebuild their inventories as consumer demand recovered from the pandemic much faster than factories and shipping companies could handle. The advent of the delta variant in late July also shifted more demand away from services and towards goods as ports and factories faced new closings.
The result: bottlenecks, delivery delays and higher prices due to 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,” said Paul. “Is shipping a restriction? Are the materials a limitation? Or is it just that people want things faster than is possible with any resource to make it happen? “
Paul said that while not all buyers find what they want on time, especially when they are looking for cars or trucks, âthings are getting better day by day and week by week so I think the hype is going to be bigger than that the effect.”
“There are many instances where both manufacturers and retailers are trying to get the most of it, and I imagine that consumer disappointment will be far less than one might expect,” he continued.
The business group for large retailers, the Retail Industry Leaders Association (RILA), was optimistic about the Christmas season.
âInterruptions in the supply chain and a shortage of skilled workers are problematic, but if one muscle has been played in the last two years, it is that of resilience. Leading retailers are working around the clock to make sure they meet customer needs and have full supplies this holiday season, âsaid Michael Hanson, RILA’s senior executive vice president of public affairs.
Hanson said the Biden government could do more to ease supply chain congestion, such as addressing container relocation for return and committing to data infrastructure standards for visibility and predictability in ports.
Republicans have argued that Biden has exacerbated labor shortages, particularly with his vaccine or testing mandate for companies with 100 or more employees that has a Jan. 4 deadline for companies to comply but faces legal challenges.
More than 40 GOP senators officially petitioned earlier this month to reject and revoke Biden’s mandate.
âIn the midst of a labor shortage, supply chain crisis, and on the edge of the holiday season, President Biden should work to help private companies recover from the pandemic. Instead, he’s trying to force the government to make a personal health decision between individuals and their doctors, âsaid Senator. Cynthia LummisCynthia Marie LummisOn The Money – Biden ends the Infrastructure Week (R-Wyo.) Said then.
Due to the typical need for additional workers and the current shortage of staff in the retail sector, the National Retail Federation (NRF) forecasts that around 700,000 additional workers will be required in the retail sector this Christmas season.
“It’s certainly real,” said David French, senior vice president of government relations at NRF, when asked about the labor shortage.
âAll of our members report hiring challenges, with some of the larger members having accelerated salary increases and bonuses. It’s a challenge, âhe said, adding that the HR departments need to set up the systems to fulfill the mandate while also taking on the hiring process.
The White House has argued that the vast majority of companies do not fear the mandate will make it difficult for them to retain workers, claiming that it will make companies safer and make people feel safer at work.
The labor protection agency said it will suspend mandate enforcement for businesses after a federal appeals court re-affirmed its decision to suspend the mandate. But the White House is still pushing big corporations to move forward with it.
“Our message to companies right now is to press ahead with measures that will make their workplaces safer and protect their workforce from COVID-19,” Psaki said this week.