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Supply Chain Vulnerabilities Continue to Strain American Consumer Experiences

Source: Gallup

Survey conducted July 19-26, 2021

Americans are experiencing daily disruptions from global supply chain shortages — 60% were unable to acquire a product that they needed this summer, according to a Gallup poll conducted last month. Additionally, more than half of Americans experienced extraordinary delays in receiving an order, while 46% said they experienced both of these disruptions.

Across all U.S. states and income groups, 83% of consumers also reported seeing price increases while shopping for products this summer. Retailers’ inability to keep up with consumer demands has contributed to these rising prices — for example, grocery store food costs were 2.6% higher last month than in July 2020.

More than 18 months into the pandemic, global supply chain vulnerabilities are worse than ever, from major delays to temporary facility closures. With the spread of the Delta variant, it appears that these disruptions could last through 2022. The U.S. government and businesses are responding to these vulnerabilities by readjusting their focus on U.S. manufacturing and trade policies, includingfriendshoring.”

Global Housing Slump Likely Next Year

 

Housing markets around the world are headed for their biggest slump in over 20 years, as central banks raise interest rates and real wages fall, according to data from Oxford Economics. 

On the heels of the pandemic housing boom, housing sales and prices are falling in wealthy countries like the U.S., Germany, France, the U.K., Canada and New Zealand. In China, property stands empty as construction stalls on around 2 million homes. Inflation is the main factor behind the slowdown: higher mortgage rates, decreased affordability, and stricter lending standards have led analysts to project a moderate-to-steep drop in the housing market in 2023. 

In the U.S., mortgage rates reached 7% for the first time since 2002, pushing potential buyers out of the market. Mortgage rates have almost doubled in 25 cities around the world, including Amsterdam, Toronto and Zurich. Rent prices are also starting to cool after a pandemic surge — in the U.S., rents dropped slightly from September to October, ending a two-year growth streak. Housing prices in China fell at their fastest rate in seven years, and sales fell by 43%. In the U.K., housing sales dropped by 32% year-over-year in September, while U.S. sales of existing homes fell 28% in October.

Gen Z Trusts Local News Over Social Media

U.S. adults of all ages trust local news organizations more than information from national news outlets or social media, a recent Pew Research Center study reveals. The majority of Americans (71%) say they have a lot or some trust in local news, but that share is down from a high of 85% in 2019 and 2017.

In contrast, trust in social media has risen to its highest level among adults under 30. Half of 18- to 29-year-olds say they trust information from social media, just under the 56% who trust national news outlets. The percentage of young adults who trust national news is at its lowest level. About a quarter of adults under 30 regularly get their news from TikTok. The share of Americans of all ages who get their news from TikTok (10%) has tripled in the last two years.

U.S. adults over 30 are much less likely to trust information from social media, and Americans 50 or older are more likely to trust national and local news. But political parties are still the most influential factor in Americans’ perception of the media — Democrats (77%) are much more likely to trust national news outlets than Republicans (42%).

Consumers Keep Spending as Inflation Rises

Source: The Economist

Americans are heading into Black Friday sales ready to spend, even as their confidence in the economy drops. 

U.S. consumer spending seemed resilient to inflation in recent months, increasing by 0.6% in September and 6.2% since last year. Retail sales also rose more than expected, up by 1.3% in October, their strongest gain in eight months. That gain was driven, in part, by early holiday sales in October, from retailers like Amazon and Target.

But some retailers don’t expect that spending to last, as steep prices mean consumer dollars don’t go as far compared to previous years. Despite deeper discounts, inflation has pushed the cost of goods like toys and electronics higher than in 2021. Clothing is the only category that is cheaper this year.

About 60% of consumers said that they had already cut spending in response to inflation, while more said they would cut spending next year. That uncertainty was reflected in this month’s consumer sentiment index, which recorded a drop in consumer confidence of 9% —  the first decline since the index’s all-time low in June.

Grocery Prices Rise Before Thanksgiving

Source: CNBC

Thanksgiving will be a more expensive affair this year as inflation and the effects of climate change push food — including turkey — costs higher. 

Consumer prices from gas to clothing rose by 7.7% over the past year, the Bureau of Labor Statistics reported this month. Grocery prices rose even higher, with food items 12.4% more expensive than October 2021. Turkey alone costs 23% more than last year, while the cost of staples like eggs, butter and flour has increased by up to 32.5%.

Despite the significant gains over last year, the Consumer Price Index rose less than expected in October. Prices rose 0.4%, the same increase as September, instead of the Dow Jones’ estimated 0.6%. The slowdown has some economists saying that inflation is beginning to moderate, though it is still above the Federal Reserve’s 2% target.

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