The United States may usher in the "most expensive" holiday shopping season

Source: Economic Reference Newspaper

The United States is ushering in a holiday shopping season with Thanksgiving as the prelude, and although agencies expect sales to hit new highs this year, U.S. consumers will usher in the "most expensive" holiday shopping season due to factors such as high inflation, insufficient wage increases, and lower price discounts than in the past.

Consumers face an expensive shopping season

The National Retail Federation (NRF) said on the 27th that due to factors such as the longer cycle of the holiday shopping season and the reduction of discounts, sales in the 2021 US holiday shopping season will only increase by about 10% compared with last year. However, even if supply chain problems ease, consumers may face the most expensive shopping season in the context of high inflation.

The NRF expects sales in November and December to rise 8.5 percent to 10.5 percent from last year to $843.4 billion to $859 billion, another record high. The data does not include sales at car dealerships, gas stations and restaurants.

In terms of online shopping, the epidemic may lead to a slowdown in sales growth in the UNITED States at the end of this year. Agency Adobe Analytics predicts that online sales in the U.S. will grow 10 percent year-over-year to $207 billion in November and December, down from a record 33 percent in 2020, when people chose to shop online from home during the pandemic.

Several retailers began holiday season promotions as early as September, warning customers that their favorite items might sell out or deliveries might take longer than usual. A survey last week by NRF and research firm Prosper Insights & Analytics showed that some shoppers are concerned that they will struggle to buy the electronics, clothes and toys they want because of supply issues caused by the COVID-19 pandemic.

In response to potential inventory shortages, many retailers are reducing discounts and looking to increase sales time spans by encouraging customers to start holiday shopping early this year. Industry insiders even expect consumers to buy a range of products at prices closer to full price this holiday season.

A number of US media reported that retailers have finally taken greater pricing power in the wave of commodity shortages this year after years of crazy discounting to compete for the market, which has also forced many customers to think twice when making holiday shopping plans.

Wages are rising less than inflation

Another point of concern is the insufficient growth rate of people's pay, because the salary of company executives has risen much higher than most grassroots employees, whose income growth has increased at greater risk than inflation.

The latest U.S. Department of Labor data showed that the consumer price index rose 0.4% in September from August and rose 5.4% year-on-year. At the same time, the income gap between the top executives of enterprises and ordinary workers continues to widen. In 2020, the earnings of CEOs of large companies rose by 16%, but the salaries of ordinary workers rose by only 1.8%. For example, at John Deere Engineering Vehicles in the United States, employees recently found that after the company's profits hit a record high this year and the CEO's salary increase was as high as 160%, the increase in employees' salaries next year was only 5%, while overtime pay and medical insurance benefits were canceled, which could not keep up with the soaring price rate, causing about 10,000 corporate employees to be dissatisfied.

According to Bloomberg, since October, more than 100,000 workers in various industries across the United States have been holding or brewing strikes because they are dissatisfied with wages, from workers on machinery and food production lines in the United States, to nurses in Massachusetts and winemakers in Kentucky, to Hollywood workers.

A recent report by Deutsche Bank pointed out that labor cost tightening in developed countries, represented by the United States, has become a long-standing problem. Looking back at the 1980s, these developed countries in Europe and the United States solved the problem of stagnancy by introducing cheap overseas labor or moving factories to other places. Local people are also paying the price of long-term job displacement. Nowadays, it is becoming increasingly difficult for companies to continue to rely on overseas labor to reduce costs.

Under the background of the epidemic, the widening gap between rich and poor in the United States has also affected the consumption power of residents, and it is difficult for basic employees and ordinary consumers to get rid of the fate of gradually "becoming poor". As of the second quarter of this year, the richest 10 percent of Americans held 89 percent of the nation's stocks, while the bottom 90 percent of individuals held just 11 percent of stocks, slightly below the pre-pandemic 12 percent level, according to the Federal Reserve. Over the past year and a half, nearly 70 percent of the wealth gains of the 1 percent of people standing at the top of the U.S. wealth pyramid have come from stocks. As a result of holding large numbers of stocks and funds, the assets of the richest 1 percent of the richest people in the United States increased by more than $6.5 trillion, while the assets of the bottom 90 percent increased by only $1.2 trillion.

Supply chain challenges increase shopping costs

In the face of the rising cost of the shopping season caused by the intensification of the supply chain crisis, the US government and the transportation department are stepping up to resolve it, but it will be difficult to work in the short term, and the long-term fundamental problems will be difficult to solve.

The Port of Los Angeles announced this week that in order to improve the efficiency of port operations and improve congestion, the Ports of Los Angeles and Long Beach will implement a new policy of charging shipping companies with new surcharges, and from November 1 this year, the Ports of Los Angeles and Long Beach will charge shipping companies a surcharge of $100 per container for trucking and rail transportation overdue, and increase by $100 per day. For containers transported by truck, a surcharge will be charged to the shipping company if the stay at the terminal exceeds 9 days (including 9 days), and for containers transported by rail for more than 3 days (including 3 days), a surcharge will be charged to the shipping company. The policy applies to imported containers stranded at the terminal. The government said it was to ease the growing congestion on cargo ships.

In a statement, Kurdro, executive director of the Port of Long Beach, explained that the dock was about to run out of space and that immediate action must be taken to speed up the circulation of containers and make room for containers that were about to be unloaded.

Earlier this month, the Biden administration unveiled plans for 24-hour operations of the ports of Los Angeles and Long Beach, but the effect of unblocking was not obvious.

Josie Sheffield, director of the Transportation and Logistics Center at the Massachusetts Institute of Technology in the United States, recently pointed out that the government's extensive financial stimulus measures after the outbreak of the new crown pneumonia epidemic, the damage to the global supply chain and the aging of the US infrastructure are the three major reasons for the current supply chain crisis in the United States.

Sheffield said that after the outbreak, the U.S. federal government issued cash checks to people suffering from economic hardship. This approach, while understandable, is "wrong". "I think money should be given to people who really need it, but the U.S. government is giving money to too many (unhelpful) people." He believes that the extensive fiscal stimulus measures of the US federal government, coupled with the reopening of the US economy, have stimulated people to consume heavily, but the production capacity and logistics level are limited, and "they are not transferred by people's desire to consume."