ou’ve probably noticed that prices have gone up on groceries, essentials, home appliances, fast food and all sorts of consumer goods. Inflation is at more than a decade-long high.
That means 2021 will be among the most expensive holiday shopping seasons ever. But shoppers aren’t holding back just yet. Companies are confident you’ll keep paying higher prices, especially during the holidays. They’d better be right: If consumers get sticker shock and decide to pull back spending, the US economy could be in big trouble.
Despite a global supply chain crisis, a resurgence of Covid cases and high inflation, America’s economy remains in pretty decent shape. Consumers aren’t spending as much as they did in the spring, when they still had gobs of money to blow from their stimulus checks, but they continue to open up their wallets — albeit for some smaller purchases. Consumer spending rose a healthy 0.6% in September after growing 1% in August, the Bureau of Economic Analysis reported Friday. But the report came with some red flags: Large, durable goods purchases (think cars and appliances) were down 0.2%, while spending on other, nondurable items surged 0.9% — mostly because food and gas prices are on the rise.
That suggests consumers are willing to keep spending, even while prices increase. But they could be holding back on some bigger-ticket items. The good news is the Delta variant seems to be on the downslide, at least for now. Consumers could start venturing out again toward the end of the year if the trend continues. And automakers are reporting some easing of the supply chain crisis that has seriously crunched inventory — which could help car prices come down a bit and lead to some robust end-of-year purchases, perhaps some luxury cars with bows on their tops for holiday gifts. If we’re in for a December to remember, though, consumers are going to have to keep dealing with higher prices.