Economy slowing but US unlikely to enter into recession in 2022: NRF

“I am not betting on an official recession in the near term, but the most recent research pegs the risk over the next year as about one in three and it will be touch and go in 2023,” Kleinhenz said.

“Regardless of the prospect of a downturn or whether it will meet the threshold of a recession, the consumer outlook over the next few months remains favourable,” Kleinhenz said. “The economy is moving away from extremely strong growth toward moderate growth, but increased income from employment gains, rising wages and more hours worked is expected to support household spending. Policy issues will likely be the deciding factor shaping the economic outlook this year and next.”

Kleinhenz’s remarks came in the July issue of NRF’s Monthly Economic Review, which said economic data is “softer than a few months ago” but “still signals further solid economic growth.”

Job openings and quit rates suggest that the labour market remains tight, payroll growth remains sturdy despite a slowdown in May, and the unemployment rate has remained at 3.6 per cent – just above a 50-year low seen before the pandemic – for three months in a row, according to the report. A closely watched survey of manufacturing from the Institute of Supply Management showed that suppliers’ deliveries had improved in May as demand, orders and order backlogs grew at an improved pace, the NRF report said.

Retail sales as calculated by NRF – which exclude automobile dealers, gas stations and restaurants to focus on core retail – were expected to drop in May but remained unchanged from April and grew 6.7 per cent year over year. Sales were up 7.3 per cent for the first five months of the year compared with 2021.

The Federal Reserve is moving aggressively to control inflation by raising interest rates to cool demand without stalling the economy. “It is not going to be easy,” the report quoted chairman Jerome Powell as saying. “We are not trying to induce a recession.” The central bank increased the benchmark federal funds rate by three-quarters of a percentage point in June, to a range between 1.5 and 1.75 per cent. That was the largest increase since 1994, and the Fed expects the rate to hit 3.4 per cent by the end of the year and 3.8 per cent by the end of 2023.

Fibre2Fashion News Desk (KD)