Excess inventory weighs on retail sales and prices
Higher food prices have shifted consumer spending away from some discretionary items, prompting retailers to lower profit forecasts in July 2022. In general, many retailers purchased excess items before experiencing lower sales, prompting discounts to clear out inventory. Inventory to sales ratios have increased since Spring 2021 lows. This indicates that businesses have more goods than they can sell and could result in lower prices and earnings for retailers. Additionally, it could lower company orders from suppliers and manufacturers. Rising interest rates cause dramatic changes in consumer confidence As the federal government attempts to stabilize economic growth after the COVID-19 (coronavirus) pandemic, raising interest rates is one of the many ways The Federal Reserve can stabilize rapid growth. Although raising interest rates are intended to help the economy in the long run, the short-term effect may have some negative implications on the United States’ financial sector. Since interest rates play a vital role in dictating consumer confidence and general investment activity, a large spike in the central bank’s policy rate (CBPR) can make consumers and businesses more hesitant to invest in the domestic economy. As a result, industries will have to adapt to evolving consumer sentiment and strategize new investment tactics. Supply chain congestion eases to lowest point since January 2021 According to the Federal Reserve Bank of New York Global Supply Chain Pressure Index, the global supply chain congestion reached its lowest point in July 2022 since January of 2021. The lockdowns and sanitary measures in response to COVID-19 (coronavirus) pandemic increased the congestions in trade ports across the world. Moreover, the constrained global supply chain since the pandemic is one of the main factors creating the present historically high inflation. Although it has not yet reached pre-pandemic lows, the downward trend of the index represents a sign that inflation might be on its way down. Overall, the easing of global supply chain congestion poses a benefit to the various industries that depend on global trade.
INDUSTRY AT A GLANCE