SurveysMay 19, 2022
5 Predictions for Jewelry Retail in the Second Half of 2022SurveysJul 06, 2022
A Recession Is Unlikely, Says NRF Economist
The economy is moving from “extremely strong” to “moderate” growth, said NRF Chief Economist Jack Kleinhenz.
National Retail Federation Chief Economist Jack Kleinhenz shared his thoughts on a possible recession in the organization’s most recent monthly economic review.
New York— The U.S. economy is unlikely to sink into a recession this year, according to National Retail Federation Chief Economist Jack Kleinhenz.
The organization’s head economist gave an overview of the current economic situation, as well as his predictions for the next few years ahead, in the NRF’s latest Monthly Economic Review.
The United States is facing its highest inflation rates in 40 years, he noted, prompting the Federal Reserve to raise the benchmark federal funds interest rate by three-quarters of a percentage point, the largest increase since 1994.
To fight inflation, Kleinhenz explained, the Fed has to slow demand, and to do that, it has to be more expensive for consumers and businesses to borrow money.
“The Fed increases will mean higher interest rates and higher monthly payments on home mortgages, car loans and credit card bills for consumers while businesses will see higher costs for corporate borrowing and the government will pay more on the $23.9 trillion in debt held by the public,” he wrote.
The Fed’s latest forecast pegs the benchmark federal funds rate at 3.4 percent by the end of 2022 and 3.8 percent by the end of 2023.
Raising the interest rate, he said, weighs down stock and bond returns and impacts consumer confidence.
The Federal Reserve Bank of New York’s Survey of Consumer Expectations said households expect inflation to rise 7 percent over the next year, but only 4 percent over the next three years.
To add to the situation, the war in Ukraine has not only led to geopolitical strife but also driven up energy prices and exacerbated supply chain issues.
Yet, despite these myriad economic and political issues, economic data is still signaling solid growth ahead, Kleinhenz said.
Consumer spending has remained resilient in the face of inflation.
The NRF calculates retail spending, narrowing in on core retail by excluding automobile dealers, gas stations and restaurants.
Its data shows retail spending in May was unchanged month-over-month and up nearly 7 percent year-over-year.
For the first five months of 2022, retail sales were up more than 7 percent compared with the same period in 2021.
Related stories will be right here …
The organization’s head economist gave an overview of the current economic situation, as well as his predictions for the next few years ahead, in the NRF’s latest Monthly Economic Review.
The United States is facing its highest inflation rates in 40 years, he noted, prompting the Federal Reserve to raise the benchmark federal funds interest rate by three-quarters of a percentage point, the largest increase since 1994.
To fight inflation, Kleinhenz explained, the Fed has to slow demand, and to do that, it has to be more expensive for consumers and businesses to borrow money.
“The Fed increases will mean higher interest rates and higher monthly payments on home mortgages, car loans and credit card bills for consumers while businesses will see higher costs for corporate borrowing and the government will pay more on the $23.9 trillion in debt held by the public,” he wrote.
The Fed’s latest forecast pegs the benchmark federal funds rate at 3.4 percent by the end of 2022 and 3.8 percent by the end of 2023.
Raising the interest rate, he said, weighs down stock and bond returns and impacts consumer confidence.
The Federal Reserve Bank of New York’s Survey of Consumer Expectations said households expect inflation to rise 7 percent over the next year, but only 4 percent over the next three years.
To add to the situation, the war in Ukraine has not only led to geopolitical strife but also driven up energy prices and exacerbated supply chain issues.
Yet, despite these myriad economic and political issues, economic data is still signaling solid growth ahead, Kleinhenz said.
Consumer spending has remained resilient in the face of inflation.
The NRF calculates retail spending, narrowing in on core retail by excluding automobile dealers, gas stations and restaurants.
Its data shows retail spending in May was unchanged month-over-month and up nearly 7 percent year-over-year.
For the first five months of 2022, retail sales were up more than 7 percent compared with the same period in 2021.
As COVID-19 restrictions ease, households are expected to adjust their spending and shopping habits, said Kleinhenz.
Overall household spending, other than retail sales, is expected to climb 9 percent to a new high next year.
Spending on services and travel is also expected to rise.
Restaurant sales, which Kleinhenz said act as a proxy for broader services, posted month-over-month growth of nearly 1 percent and year-over-year growth of 18 percent in May.
The Transportation Security Administration is shuffling an increased number of travelers through security, with passenger volume close to pre-pandemic levels.
More than 40.3 million travelers passed through airport checkpoints between June 1 and June 17, only 13 percent below the same period in 2019.
Manufacturing activity also rose in May, Kleinhenz noted.
Supplier deliveries improved alongside “decent” demand and orders, while order backlogs grew at a faster pace, according to the monthly report on business from the Institute for Supply Management.
The job market also remained steady.
“None of us can say with any assurance what the future holds, but policy actions will likely be the deciding factor shaping the economic outlook this year and next.”—NRF Chief Economist Jack Kleinhenz
“Job openings and quit rates through the end of April suggest the job market remains tight, payroll growth remains sturdy even though it slowed in May, and the unemployment rate has been steady at 3.6 percent for three months in a row,” said Kleinhenz.
The current period of economic expansion is more than two years old, he said, meaning it has lasted longer than the two-month recession that ended in April 2020.
“I am not betting on an official recession in the near term, but the most recent research pegs the risk over the next year at about one in three and it will be touch and go in 2023,”said Kleinhenz.
While he does not believe a recession necessarily is coming, a contracting economy is still possible.
The consumer outlook over the next few months is favorable, he said, as most U.S. households continue to have high levels of purchasing power.
“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,” he said.
A recent report from Fruchtman Marketing forecasts 2022 jewelry sales will take a similar path of moderate growth compared with the period of strong growth last year.
“None of us can see around corners or say with any assurance what the future holds, but policy actions will likely be the deciding factor shaping the economic outlook this year and next,” Kleinhenz said.
To read the full economic review for July, visit the NRF website.
More on Surveys
The Latest
MajorsJul 26, 2024
Diamonds Direct Opens Store in AtlantaIt’s the Signet-owned banner’s first location in Georgia.
TrendsJul 26, 2024
Piece of the Week: Bea Bongiasca’s ‘Double Loop’ EarringsCommemorate “brat summer” with these green hoops.
EditorsJul 26, 2024
Out & About: A Dispatch from the Nation’s Smallest StateEditor-in-Chief Michelle Graff returns from Rhode Island with thoughts about in-store shopping and a trends report.
Brought to you by
The End of an Era? Lab-Grown Diamonds' Journey Towards Price StabilityAs the demand for lab-grown diamond jewelry may still be increasing, the most notable change we are likely to see is price stabilization.
Supplier BulletinJul 25, 2024
Meet Gemology’s Next Generation Microscope: GIA® Gemolite® NXT Professional EditionSponsored by Gemological Institute of America
Weekly QuizJul 25, 2024
This Week’s QuizTest your jewelry news knowledge by answering these questions.
TechnologyJul 25, 2024
Amazon, BBB Sue Website Allegedly Peddling Fake Reviews They claim ReviewServiceUSA.com was selling both positive and negative reviews of products and businesses.
SourcingJul 25, 2024
De Beers’ H1 Revenue Falls 21% in ‘Weak’ MarketLab-grown diamond sales in the United States and ongoing economic challenges in China are impacting natural diamond demand.
Brought to you by
Meet Gemology’s Next Generation Microscope: GIA® Gemolite® NXT Professional EditionGIA®’s most advanced microscope has new features to optimize greater precision and comfort.
IndependentsJul 25, 2024
Store Designer Ruth Mellergaard DiesA longtime member of IJO, she’s remembered for her passion for design, learning, and environmentalism.
FinancialsJul 25, 2024
Boucheron, Pomellato Post Double-Digit Growth in Q2 The gains come amid a tough time for parent company Kering, which saw sales slide 11 percent in the first half of the year.
MajorsJul 25, 2024
Shane Co. Partners With Kids In Need Foundation to Donate 7,200 BackpacksThe fine jewelry retailer filled backpacks with back-to-school essentials for students in 13 states.
FinancialsJul 24, 2024
LVMH’s First-Half Jewelry, Watch Sales Dip 5%Tiffany & Co. is focusing on its “iconic” collections while the company has made changes at the top at TAG Heuer and Hublot.
MajorsJul 24, 2024
See Chaumet’s Paris Olympic Medals Inspired by its High JewelryThe Parisian brand is the first jewelry company in the history of the Olympic and Paralympic Games to design the medals.
MajorsJul 24, 2024
Jewelers Mutual Acquires Pawnbroker Insurance ProviderUnion Life & Casualty will join JM Insurance Agency Partners, expanding the provider’s pawnbroker coverage.
MajorsJul 24, 2024
Ben Bridge Announces 2024 Lonia Tate Scholarship WinnerLos Angeles-based Bradlei Smith was selected for this year’s award.
ColumnistsJul 23, 2024
Peter Smith: The Case for Optimism in Sales In his latest column, Smith shares multiple reasons why people who look at the glass as being hall full often make better salespeople.
SourcingJul 23, 2024
De Beers’ Production Drops 15% in Q2The company also reported the $150 million sale of an iron ore royalty right, part of its ongoing effort to divest “non-core” assets.
IndependentsJul 23, 2024
Long’s Jewelers Is Giving Away a Luxury Cape Cod VacationThe giveaway is part of the New England jeweler’s summer bridal event.
CollectionsJul 23, 2024
Guzema Debuts ‘Flower Power’ CampaignThe ad features three celebrity florists creating floral sculptures while wearing jewelry by Guzema.
Policies & IssuesJul 23, 2024
Diamonds Do Good Announces Its 2024 Entrepreneurship Grant WinnersThe grant provided a total of $100,000 to support 13 entrepreneurs from diamond communities in Africa and India.
CrimeJul 22, 2024
Florida Jeweler Shot, Killed Following Argument With CustomerGhazi Michel Osta, or “Gus,” was killed Friday by an 83-year-old man said to be a frequent customer at his store, Volusia Gold & Diamond.
Policies & IssuesJul 22, 2024
JVC’s Elyssa Jenkins-Pérez Joins RJCThe organization also announced Effie Marinos as its new specialist advisor for technical standards, as well as four other appointments.
SourcingJul 22, 2024
AWDC Names Karen Rentmeesters as CEORentmeesters has served as interim CEO since April following former CEO Ari Epstein’s resignation.
IndependentsJul 19, 2024
Longtime D.C. Jeweler Brian Mann Dies at 70Mann, whose family’s jewelry store was located inside the Pentagon, is remembered for being a thoughtful champion of the industry.
IndependentsJul 19, 2024
The 1916 Company Opens New Tudor BoutiqueThe 500-square-foot boutique is located in Denver’s Cherry Creek Shopping Center.
CollectionsJul 19, 2024
Piece of the Week: Messika’s ‘So Move Max’ NecklaceDance all night long with the “So Move Max” set’s necklace.
WatchesJul 18, 2024
TAG Heuer, Hublot Will Have New CEOs Luxury giant LVMH is reshuffling the leadership in its watches division.
