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Home » NRF says U.S. economy will continue growth despite end of stimulus spending

NRF says U.S. economy will continue growth despite end of stimulus spending

Consumers may feel temporary “indigestion” from federal inflation measures, but GDP should stay solid in 2022, retail group forecasts.

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February 1, 2022
Supply Chain Quarterly Staff
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Economic growth is likely to continue in U.S. markets even as federal bankers take steps to slow inflation, according to a National Retail Federation (NRF) report released as the country approaches two years since the short-lived 2020 recession.

That assessment comes as the country appears to be at the midpoint of an economic cycle, NRF Chief Economist Jack Kleinhenz said today. “The maturing economy remains in growth mode and there is good reason to expect it will soon approach normal trends,” Kleinhenz said in a release. “Despite ongoing challenges, we are clearly still in an expansion phase. The question is how long it will last as policymakers strike a delicate balance between encouraging growth and taming inflation.”

The NRF found that the economy “is running hotter than it has in a long time” despite the end of federal intervention, showing that the nation’s economy is sturdy enough to stand on its own without pandemic stimulus checks and unemployment benefits.

By the numbers, gross domestic product (GDP) was up 5.7% in 2021 from 2020, the fastest growth for any calendar year since 1984, and household spending continued to grow in the fourth quarter even though not as quickly as earlier in the year. Kleinhenz said he expects GDP to grow between 3% and 4% in 2022, still faster than the 2.3% annual pace during the 2009-2020 expansion that was ended by the pandemic.

That growth is counterbalanced by the highest inflation in nearly 40 years, with the Consumer Price Index (CPI) up 7% year-over-year as of December, the NRF said, citing the Bureau of Labor Statistics. In response, the Federal Reserve has said it may soon raise interest rates to tighten the availability of credit and help bring inflation under control. Those rate hikes would make mortgages, car loans, and other credit more expensive, but the NRF forecasts that households are poised to continue spending anyway.

“It is not clear how Fed policy will develop, and there will be indigestion as we adjust to new policies,” Kleinhenz said. Nonetheless, both households and businesses are “in good financial shape,” Covid-19 is having less of an impact on economic activity “and there is plenty of room to raise rates without threatening the economy,” he said.


Finance Strategy
KEYWORDS NRF - National Retail Federation
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