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The proliferation of the highly contagious omicron variant is likely to drive inflation as Americans continue to shop rather than spend more outside the home, according to NFR chief economist Jack Kleinhenz.
However, an adviser to a large retail group said in a press release on Wednesday that he does not expect the latest wave of Covid cases to slow economic growth or shutdown businesses.
“Little is known about the impact of omicron on consumer demand, but people who stay at home because of this option are more likely to spend their money on retail goods rather than services such as dining out or personal entertainment.” he said in a press release. … “This will put additional pressure on inflation as supply chains around the world are already congested.”
He said that “each subsequent option slowed down the economy, but the degree of slowdown was less.” And, he added, consumers can have more confidence in their spending because they are fully vaccinated or hear about milder cases from this option.
Covid cases in the United States hit a pandemic all-time high of more than 1 million new infections on Monday, according to data compiled by Johns Hopkins University. The country is now reporting more than 480,000 new infections in seven days, nearly double its previous week, according to CNBC’s analysis of Hopkins’ data.
The surge in coronavirus cases has prompted retailers and restaurants, including Gap-owned Starbucks, Apple, Nike and Athleta, to close stores or cut opening hours as they cope with staff shortages or intensify disinfection. Last month, Walmart temporarily closed about 60 U.S. stores in coronavirus hotspots to disinfect them. Macy’s said Tuesday that it is cutting store opening hours for the rest of the month.
However, many of those same stores have made it easier for shoppers to shop in other ways, from home delivery to roadside pickup.
The National Retail Federation also doesn’t expect the pandemic to hurt holiday sales. He predicted that sales in November and December would be increased 8.5% – 10.5% over last year and reached a record sales of $ 843.4 billion to $ 859 billion.
Kleinchenz later raised that forecast, announcing in early December that holiday sales could rise 11.5% year-over-year.
The trade group expects to release official holiday sales data next week after the Census Bureau releases December retail sales data.