Even as companies are facing supply chain challenges, 40-year-high inflation rates, uncertainty over the war in Ukraine, and the lingering COVID-19 pandemic, the U.S. economy is still growing and the outlook is still bright, the National Retail Federation said.
“With changes underway that focus on taming inflation without splintering the economy, the nation’s economic system is in the process of being rebalanced in ways that are testing its resilience,” NRF Chief Economic Jack Kleinhenz said in a press release. “Though many people fear an extreme cooling off of the economy, there is not an overwhelming amount of evidence to support such predictions. In general, the data suggests that we remain in an ongoing expansion.”
Kleinhenz acknowledged that the Federal Reserve faces “a tricky job” in addressing inflation, but continuing growth in employment, wages, and consumer spending make it unlikely the effort will backfire into a major setback for the economy, he said.
Still, Walmart CEO Doug McMillon said at an investor meeting he is “concerned” about the inflation rate.
“Should it stay at this level or go up and be there for a sustained period of time – I think that has a negative impact on too many families,” McMillon said, per Grocery Dive.
Walmart is keeping the closest eye on its most value-conscious consumer group and how they are impacted by high food costs for staples such as tuna, rice, beans, pasta, and milk, McMillon noted.
“We make money in fresh food and in dry grocery, and we can manage inflation in those areas,” he said.
Overall food inflation increased 9.4 percent in April, with food-at-home prices increasing 10.8 percent compared to April 2021, according to the Bureau of Labor Statistics' Consumer Price Index.
Data tech company Numerator reported average U.S. grocery prices rose 12.4 percent for the four-week period ending 1 May, 2022. Online grocery sales experienced the most inflation, with prices spiking 17.2 percent in the month, according to Numerator.
Plus, the NRF said in a press release that new biodiesel levels set by the Environmental Protection Agency for this year are too high and will drive up inflation for already high food prices – especially processed foods.
The EPA set the Renewable Fuel Standard program’s biodiesel blending mandate for 2022 at 5.63 billion gallons, a 22 percent hike over 2020.
“For more than a year, we’ve alerted the EPA and the administration about the shortage of food oils, which is causing significant disruptions throughout the supply chain and raising food costs for consumers,” David French, the NRF senior vice president for government relations and the executive director of the NRF’s national council of chain restaurants division said.
Supplies, he said, are making life difficult for a number of food manufacturers.
“Food manufacturers simply can’t get their hands on enough of these oils to make everyday foods from bread and buns to condiments and dressings, and the problem is even worse for small and medium-size manufacturers,” French noted
Still, Kleinhenz pointed out several indicators of economic growth – including the latest Blue Chip Economic Indicators survey of economists, which projects that gross domestic product will climb 2.6 percent this year and another 2.1 percent in 2023.
In addition, 428,000 jobs were added to the U.S. economy in April, topping the 400,000 mark for the 12th straight month. Unemployment was 3.6 percent, only slightly above the 50-year low of 3.5 percent in February 2020 just before the pandemic, the NRF noted.
In addition, the Employment Cost Index showed wages rising 5 percent compared to the first quarter of 2021.
Photo courtesy of Vasileios Karafillidis/Shutterstock
