The personal consumption expenditure index climbed 6.4% in February

Companies are trying to navigate this complicated moment, assessing whether increases in input costs will continue for a second year – an...


Companies are trying to navigate this complicated moment, assessing whether increases in input costs will continue for a second year – and if and how to pass them on to consumers.

Chewy, the pet retailer, recently signed a new freight contract that will cost it more this year; and in the last quarter of 2021, it also faced higher labor costs. But he hopes these trends won’t last or that he can offset rising expenses through efficiency gains.

“As we close the book on 2021 and move forward into 2022, we are already seeing improvements in labor availability, inbound shipping costs and pricing, while out-of-stock levels and outbound shipping costs remain high,” Sumit Singh, the company’s chief executive officer, said on a earnings call this week. “At the end of the day, we believe most of these challenges are not permanent in nature.”

Other firms expect consumer demand to face some challenges this year as households weather government stimulus checks that boosted their spending capacity in 2021.

“For our business in the industry we are in, the stimulus checks have a short-term impact compared to last year,” Sportsman’s Warehouse chief executive Jon Barker said on an earnings call. March 29. “And while fuel costs and inflation will certainly impact our consumers’ disposable income, we actually believe and are confident that our industry is more – is able to weather these changes better than most.”

Thursday’s report showed that consumer spending fell in February after adjusting for inflation, falling 0.4% from January, a slightly larger drop than economists had expected. However, it continues to rise before factoring in price increases. Personal income has also continued to rise before adjusting for inflation, as wage growth picks up where government assistance stops.

Household balance sheets are still in good shape, although some alimony has expired. Many people have paid off their debts during the pandemic, and others are seeing pay rises that could help them maintain their spending in the months ahead. Households across the income spectrum accumulated savings during the pandemic, in part thanks to government relief payments.

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Newsrust - US Top News: The personal consumption expenditure index climbed 6.4% in February
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