Inflation and the war in Ukraine are creating challenges around the world, but the U.S. economy appears to be staying strong as consumers continue to support retail.
The National Retail Federation (NRF) issued the April issue of its Monthly Economic Review today with NRF Chief Economist Jack Kleinhenz weighing in on the major shift in focus from the COVID-19 pandemic to other concerns.
“While the public health situation has greatly improved, the impact of the pandemic continues to spread,” Kleinhenz says. “That ripple has extended into 2022 and includes a disproportionate impact from inflation reaching a 40-year high brought about by strong consumer demand interacting with restricted supply.”
According to NRF data, job growth and wage increases are expected to drive income gains this year while the Federal Reserve’s Interest rate hikes are expected to begin impacting inflation, though Kleinhenz believes the U.S. economy can withstand the hikes. Inflation aside, it’s the continued crisis in Ukraine that is holding attention.
“Complicating the picture is the very high uncertainty associated with the war in Ukraine and its effect on the world economy,” Kleinhenz says. “While the United States has a limited trade link with Russia, the war continues to overshadow economic news and could have a potentially serious effect on prices for energy and commodities, adding to inflation concerns. The bottom line is that there are just as many uncertainties weighing on the outlook for growth as there were a year ago even if some of the forces at play have changed.”
Overall, the NRF is forecasting a 6-8% increase in overall retail sales in the U.S. this year. A clearer picture of the impact on the U.S. toy industry is expected to emerge when first quarter earnings season begins later this month.
