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May 5, 2022
NRF: Consumers Will Keep Shopping Despite Economic Headwinds


National Retail Federation Chief Economist Jack Kleinhenz said in the organization’s Monthly Economic Review the economy’s fast-paced growth could slow somewhat as the United States Federal Reserve boosts interest rates incrementally during the coming months to slow rising prices. However, he added consumers are likely to keep on shopping as lower inflation eases uncertainty.

The Fed’s actions could mean higher car and mortgage payments, Kleinhenz said, but he noted household finances have remained strong despite consumer concerns about economic and international challenges. The 4% year-over-year increase in retail sales in March demonstrated that consumers are willing and able to spend as a result of job growth, wage gains and wealth accumulated during the pandemic, as well as low financial obligations relative to income.

Kleinhenz stated he believes inflation should slow in 2022 partly because year-over-year comparisons will be against elevated levels of 2021 spending. Also, he said, Fed and other governmental fiscal and monetary policies that have combined with ongoing pandemic-induced supply problems to drive inflation should tail off.

“The Fed’s tightening has kicked off a new cycle of adjustment and the outlook for interest rates has consequences for consumers and businesses alike,” Kleinhenz stated. “There is a growing list of uncertainties, and the risks are mounting. But underlying strength and momentum from both the consumer and business sectors are likely to offset a modest slowdown and should leave the economy bustling forward this year.”

In its annual outlook, NRF forecast a retail sales increase between 6% and 8% in 2022 to between $4.86 trillion and $4.95 trillion.

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