A Recession Is Unlikely, Says NRF Economist

SurveysJul 06, 2022

A Recession Is Unlikely, Says NRF Economist

The economy is moving from “extremely strong” to “moderate” growth, said NRF Chief Economist Jack Kleinhenz.

National Retail Federation Chief Economist Jack Kleinhenz shared his thoughts on a possible recession in the organization’s most recent monthly economic review.
New York— The U.S. economy is unlikely to sink into a recession this year, according to National Retail Federation Chief Economist Jack Kleinhenz.

The organization’s head economist gave an overview of the current economic situation, as well as his predictions for the next few years ahead, in the NRF’s latest Monthly Economic Review.

The United States is facing its highest inflation rates in 40 years, he noted, prompting the Federal Reserve to raise the benchmark federal funds interest rate by three-quarters of a percentage point, the largest increase since 1994.

To fight inflation, Kleinhenz explained, the Fed has to slow demand, and to do that, it has to be more expensive for consumers and businesses to borrow money.

“The Fed increases will mean higher interest rates and higher monthly payments on home mortgages, car loans and credit card bills for consumers while businesses will see higher costs for corporate borrowing and the government will pay more on the $23.9 trillion in debt held by the public,” he wrote.

The Fed’s latest forecast pegs the benchmark federal funds rate at 3.4 percent by the end of 2022 and 3.8 percent by the end of 2023.

Raising the interest rate, he said, weighs down stock and bond returns and impacts consumer confidence.

The Federal Reserve Bank of New York’s Survey of Consumer Expectations said households expect inflation to rise 7 percent over the next year, but only 4 percent over the next three years.

To add to the situation, the war in Ukraine has not only led to geopolitical strife but also driven up energy prices and exacerbated supply chain issues.

Yet, despite these myriad economic and political issues, economic data is still signaling solid growth ahead, Kleinhenz said.

Consumer spending has remained resilient in the face of inflation.

The NRF calculates retail spending, narrowing in on core retail by excluding automobile dealers, gas stations and restaurants.

Its data shows retail spending in May was unchanged month-over-month and up nearly 7 percent year-over-year.

For the first five months of 2022, retail sales were up more than 7 percent compared with the same period in 2021.

 Related stories will be right here … 

As COVID-19 restrictions ease, households are expected to adjust their spending and shopping habits, said Kleinhenz.

Overall household spending, other than retail sales, is expected to climb 9 percent to a new high next year.

Spending on services and travel is also expected to rise.

Restaurant sales, which Kleinhenz said act as a proxy for broader services, posted month-over-month growth of nearly 1 percent and year-over-year growth of 18 percent in May.

The Transportation Security Administration is shuffling an increased number of travelers through security, with passenger volume close to pre-pandemic levels.

More than 40.3 million travelers passed through airport checkpoints between June 1 and June 17, only 13 percent below the same period in 2019.

Manufacturing activity also rose in May, Kleinhenz noted.

Supplier deliveries improved alongside “decent” demand and orders, while order backlogs grew at a faster pace, according to the monthly report on business from the Institute for Supply Management.

The job market also remained steady.

“None of us can say with any assurance what the future holds, but policy actions will likely be the deciding factor shaping the economic outlook this year and next.”—NRF Chief Economist Jack Kleinhenz

“Job openings and quit rates through the end of April suggest the job market remains tight, payroll growth remains sturdy even though it slowed in May, and the unemployment rate has been steady at 3.6 percent for three months in a row,” said Kleinhenz.

The current period of economic expansion is more than two years old, he said, meaning it has lasted longer than the two-month recession that ended in April 2020.

“I am not betting on an official recession in the near term, but the most recent research pegs the risk over the next year at about one in three and it will be touch and go in 2023,”said Kleinhenz.

While he does not believe a recession necessarily is coming, a contracting economy is still possible.

The consumer outlook over the next few months is favorable, he said, as most U.S. households continue to have high levels of purchasing power.

“The economy is moving away from extremely strong growth toward moderate growth, but increased income from employment gains, rising wages and more hours worked is expected to support household spending,” he said.

A recent report from Fruchtman Marketing forecasts 2022 jewelry sales will take a similar path of moderate growth compared with the period of strong growth last year.

“None of us can see around corners or say with any assurance what the future holds, but policy actions will likely be the deciding factor shaping the economic outlook this year and next,” Kleinhenz said.

To read the full economic review for July, visit the NRF website.
Lenore Fedowis the associate editor, news at National Jeweler, covering the retail beat and the business side of jewelry.

The Latest

AuctionsSep 27, 2022
In Betty White’s Blockbuster Estate Sale, Jewelry Held Its Own

Fine jewelry comprised three of the auction’s top 10 lots, though it could not top her director’s chair or scripts from “The Golden Girls.”

CrimeSep 27, 2022
3 Suspects in Beverly Hills Smash-and-Grab Robbery Arrested

A total of four suspects are now in custody with police still on the lookout for the remaining two.

ColumnistsSep 27, 2022
Creative Connecting: Fun Ideas for Holiday 2022 In-Store Events

From a “whodunnit” murder mystery to a permanent jewelry party, Duvall O’Steen and Jen Cullen Williams share a wealth of suggestions.

Brought to you by
6 Steps to Start a Dynamic Company Culture

Learn how to better serve your employees, customers and community by having a dynamic and supportive company culture.

MajorsSep 27, 2022
Stuller Releases 2 Updated Catalogs Ahead of the Holiday Season

“Mountings 2023-2024” and “Diamonds & Gemstones 2023-2024” offer a vast selection of options to create custom pieces.

Weekly QuizSep 22, 2022
This Week’s Quiz
Test your knowledge of the latest jewelry news with this quick test.
Take the Quiz
Events & AwardsSep 27, 2022
ICA’s 2023 Congress Will Be Held in Dubai

The event will be hosted by the Dubai Multi Commodities Centre from Feb. 15-17.

IndependentsSep 26, 2022
Roberson’s Fine Jewelry to Close After 42 Years

The store’s liquidation sale will showcase the mix of classic and unique jewels it’s known for stocking.

Brought to you by
Committing to an Ethical Diamond Business

While ethical mining is essential to a diamond business, they represent only a fraction of the responsibility bestowed on jewelers.

CollectionsSep 26, 2022
Go ‘Inside the Dream’ of Bulgari Via a New Documentary on Amazon Prime

It follows Creative Director Lucia Silvestri as she crafts the brand’s high jewelry collections.

Recorded WebinarsSep 26, 2022
Watch: What Jewelers Should Know About Insurance

From safeguarding showcases to appraisal liability, insurance experts Mark Devereaux and Andrew Chipman share insurance tips for jewelers.

TrendsSep 26, 2022
Vahan Collabs With Wolf on a Jewelry Box

It’s the first time in 50 years the brand has made something other than jewelry.

Events & AwardsSep 26, 2022
Texas Jewelers Association Rolls Out New Format for Design Competition

The competition takes place in tandem with TJA’s annual convention, known as the Texas Jewelers Roundup.

CollectionsSep 23, 2022
Pandora Reimagines Keith Haring’s Art in New Collection

The limited-run collection features figures from Haring’s iconic street art on charms, bracelets, rings, and more.

GradingSep 23, 2022
GIA Career Fair Returns to Carlsbad

The Gemological Institute of America also announced plans for events in New York and London in 2023.

SourcingSep 23, 2022
See the Items in Gem Legacy’s 4th Anniversary Benefit Auction

One hundred percent of proceeds will benefit the nonprofit’s silicosis prevention initiative.

CollectionsSep 23, 2022
Piece of the Week: Emily Weld Collins’ Amulet

Inspired by antique coins, it depicts a “hippocamp” from Greek mythology.

EditorsSep 22, 2022
4 Things Seen and Heard at the 2022 HardRock Summit

Gemstones Editor Brecken Branstrator dishes on the latest color to trend, the show floor buzz, and more from Denver.

TrendsSep 22, 2022
There’s a New Book on Tiffany & Co.

Written by historian Vivienne Becker, it accompanies this summer’s Tiffany jewelry exhibition at London’s Saatchi Gallery.

Supplier BulletinSep 22, 2022
Using Commerce Data to Outshine the Competition in the Jewelry Industry

Sponsored by Bloomreach

SourcingSep 22, 2022
First Diamond Recovered From Burgundy’s Ellendale Restart

Burgundy also announced the retail launch of its diamond brand, Maison Mazerea.

Events & AwardsSep 22, 2022
JCK Industry Fund Now Accepting Applications

Organizations with a project or initiative aimed at bettering the jewelry industry are encouraged to apply.

Lab-GrownSep 21, 2022
An Updated Look at the Lab-Grown Diamond Market: Size, Pricing, and More

As the end of 2022 draws near, National Jeweler offers another deep dive into lab-grown diamond market data.

TrendsSep 21, 2022
These Are the Diamond Jewels to Stock for the Holidays

These trending-yet-timeless pieces are no-brainers for customers in search of the perfect gift.

SourcingSep 21, 2022
A Day in the Life: Daniel Namdar, Fancy Color Diamond Specialist

Namdar joins a long line of diamond experts, but his love of the trade was learned rather than inherited.

Lab-GrownSep 21, 2022
Looking Ahead: 4 Factors That Could Shape Lab-Grown Diamonds’ Future

Growing supply and falling prices likely will make differentiation a necessity and a reality, according to analyst Paul Zimnisky.

AuctionsSep 21, 2022
Egyptomania at Sotheby’s: See the Egyptian Revival Jewels Heading to Auction

The auction house is celebrating 100 years since the discovery of King Tut’s tomb.

MajorsSep 21, 2022
Claire’s Expands Walmart Partnership

The chain’s jewelry and accessories are now available in 2,500 Walmart locations.


This site uses cookies to give you the best online experience. By continuing to use & browse this site, we assume you agree to our Privacy Policy