Mass U.S. retail shutdown unlikely amid surging omicron variant: NRF
The Covid-19 omicron variant is unlikely to cause widespread retail shutdowns or slowdowns, according to a report issued by the National Retail Federation (NRF) on Wednesday, as 2022 looks to be “another very challenging year of substantial uncertainty," for retailers in the U.S.
For the year ahead, questions to be answered before the effects of the virus on retails can be measured include whether the pandemic is near its end, whether supply chain issues will be resolved, how high inflation will go and how long it will last, said NRF chief economist, Jack Kleinhenz.
“Even with the experience of the past two years, there is no model that can predict how the economy responds to a pandemic,” said Kleinhenz, inside NRF's 'Monthly Economic Report' for January. "What we have learned is that each successive variant has slowed down the economy but that the degree of slowdown has been less.
“While omicron is highly transmissible, its effects can be relatively mild for those who are fully vaccinated and broad-based lockdowns are not expected,” Kleinhenz added. “Little is certain about omicron’s impact on consumer demand, but people who stay at home because of the variant are more likely to spend their money on retail goods rather than services like dining out or in-person entertainment. That would put further pressure on inflation since supply chains are already overloaded across the globe.”
Wednesday's NRF report comes one week before the release of the Census Bureau's retail sales data for December.
According to the Census Bureau, November sales – excluding automobile dealers, gasoline stations and restaurants – were up 14.8 percent year over year in the U.S. Additionally, the NRF expects holiday sales during the two months are on track to grow as much as 11.5 percent over 2020.
The retail body also said inflation, which was driven by shortages of goods as Covid-19 shut down factories and snagged supply chains while government stimulus fueled consumer spending, is likely to continue in 2022, but should eventually slow.
“Inflation started gradually and then came on strong, but clearly heated up during 2021 and has become a formidable factor facing the economy and especially consumers,” Kleinhenz added. “What is ironic is that the monetary and fiscal policy that pulled the economy out of the recession has prompted unprecedented growth that is now undermined by accelerating prices.”
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