Child tax credit checks and government stimulus payments have helped accelerate consumer spending so far this year, but the next phase of economic growth will depend more on jobs, according to Jack Kleinheng, economist chief at the National Retail Federation.
“As the economy advances in the months after 2021, federal aid will be reduced and the focus will be on the ability of the labor market to generate a continued force in wages and salaries to support spending,” Kleinhenge said. , in an article published Wednesday. “US consumers remain in the mood to spend, but the job market and job creation will play an increasing role in their ability to do so.”
The job market is extremely tight. In June, there were 10.07 million non-farm vacancies, but only 9.48 million were looking for work, according to the Job Openings and Labor Turnover Survey of the Ministry of Labour. According to the cost of employment index, the imbalance resulted in a 3.2% year-on-year increase in wages and salaries for the 12 months ended June 30.
Kleinheng said paying higher wages to employers to stay competitive in the current job market could lead to higher inflation in the coming months.
Restaurant owners share their struggles to find employees and what retailers are already looking forward to during the busiest time of year. Ahead of the holidays, Walmart announced plans to hire 20,000 permanent employees. It recently sweetened the deal for its employees by paying special bonuses to its warehouses and covering 100% of employees’ tuition and textbooks. Target also extended its tuition benefits last month.
Salaries are also increasing. Walgreens and CVS Health were among the latest retailers to announce that they would increase the starting wage to $ 15 an hour over the next several months. This was followed by salary increases at companies ranging from Chipotle and McDonald’s to Costco and Best Buy.
But Kleinheng said he didn’t think those higher wages and benefits were built into the price hikes that consumers are seeing.
“The recent surge in inflation in the United States is mainly due to supply chain constraints and low inventory levels, but the higher labor costs are often passed on to consumers and viewed as negative. a harbinger of broader inflation, ”he said.
Kleinhenge does not anticipate that the spread of COVID-19 will cause Delta Edition Group to lower its retail sales forecast, even though this could moderately disrupt retail sales. NRF expects retail sales to grow between 10.5% and 13.5% this year from 2020.