Santas, evergreens, and gifts are in short supply. It's not a very Merry Christmas.
Many holiday shoppers feel like a Grinch because of the shortages this holiday season.
The University of Michigan's index of consumer sentiment reported economic angst at a decade low in November and an expectation of a more than 4.9% price increase in 2022, the highest since the Great Recession. 70% of shoppers expect higher prices during the holidays, according to a recent survey.
The economy seems to be doing well, but it's quite a grumpy outlook. The Senate just passed a $1 trillion infrastructure bill, which was passed by President Joe Biden, who has already led the US through one of its strongest ever quarters of economic growth. The hiring picked up in October after slowing during the Delta wave. It's an employee's world as many workers quit their jobs and demand better pay, with employers scrambling to retain them. Americans spent a record high amount of money last month.
A supply chain crisis is one of the effects of a healing America. Americans had more use for gym equipment and new TVs as the economy was reshaped into one based on remote work. As supply broke down, the demand outpaced supply.
As we near the end of the year, higher prices and longer wait times are sticking with us, and no one is happy about it.
The news of a potentially vaccine-resistant new COVID variant rattled markets on Black Friday, sending the Dow down as much as 1,000 points, as investors worried that the "reopening" trade was being swapped again for a "stay at home" economy. If you have an outlook like that, this is no surprise.
Availability and inflation are not good.
Americans were already holiday shopping part of October's retail sales boom.
Black Friday and Cyber Monday sales were preceded by the behavior. It's a sign that consumers are less concerned about price increases and more worried about the factors that make buying and giving holiday gifts more difficult.
Susana is on November 23, 2021.
Richard Kilgore, an instructor in the Online Management and Business Administration program at Maryville University, told Insider that it's likely that high holiday demand and rising supply-chain costs could prompt companies to hike their prices. He said that consumers are less price sensitive when it comes to making the holidays special.
As consumers move to their second and third choices, sales could be less impacted by companies running out of stock on high-demand items.
Several forecasts back him up. The National Retail Federation predicted US holiday sales would surge from 8.5% to 10.5% this year, and Gallup found that consumers plan to spend $886 on holiday gifts this year, compared to $800 in 2020. Gallup said that this "robust" is a sign of strong holiday sales.
Lower-income shoppers who can't bank on relief aid are more likely to be hurt by inflated prices. Some of the biggest victims of inflation have been essentials like food and energy, which make up a third of their earnings. It's eating into holiday budgets and leaving a lot of Americans with plans to not shop at all. More than half of this group earn less than $50,000.
That's the highest share in a decade, and more than double the share in 2020, which was a very miserable holiday as people waited for their checks.
Poor and rich Grinch.
The type of Grinch you are is dependent on your wealth. Wealthy shoppers are ready to spend more but are not happy with not getting the things they want in time. Less wealthy shoppers are upset that they can't afford a big holiday season. This year, shoppers are united by a persisting pessimism, but it's another K-shaped Christmas. The wealthy were unbothered by the holiday season in 2020 and this year they're catching on to the economic misery further down the economic ladder.
70% of Americans think the economy is getting worse, according to a Gallup poll. That's still low, nowhere near the negative sentiment levels that plagued the years surrounding the 2008 financial crisis.
Americans have been pessimistic about the economy for the past 20 years. The "just-in-time economy" of the 2000s has been threatened by supply shortages. These are economic problems that Americans have yet to experience.
Workers are grouchy because they can't find a job, employers are grouchy because they can't find workers, and a historic housing crisis has made homeowning difficult.
Kilgore said it's nearly impossible to tell if the supply chain crisis is easing or not. Transient changes that simply moved unshipped inventory off docks into storage waiting for trucks to avoid penalty fees may be what's happening at ports. The link in the chain is where the bottleneck moves.
