US economic activity slows as omicron takes center stage: SPG Global

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The US economy appears to have lost steam to start the year as omicron takes centre stage and inflation takes a bite out of purchasing power, said SPG Global.  Consumer confidence readings disappointed in January, reflecting inflation concerns and virus fears. University of Michigan consumer sentiment dropped to 68.8 in the preliminary January reading.

While weekly same-store retail sales remain robust, inflation readings indicate people are buying fewer items at higher prices, SPG Global said.

Supply constraints have eased in recent months, though new lockdowns could reignite disruptions and it remains to be seen whether new lockdowns across the globe may reignite supply disruptions later in January, with China, based on its ‘zero-COVID’ policy, possibly starting the trend, it observed in a research note.

The US economy appears to have lost steam to start the year as omicron takes centre stage and inflation takes a bite out of purchasing power, said SPG Global. Consumer confidence readings disappointed in January, reflecting inflation concerns and virus fears. University of Michigan consumer sentiment dropped to 68.8 in the preliminary January reading.

The Ipsos-Forbes Advisor US Consumer Confidence Tracker released on January 13, still at pre-omicron levels, is 10 per cent below its 62.4 high from the week of June 10.

Retail sales fell by 1.9 per cent in December after strong gains through August, with holiday shopping pulled forward on worries that supply-chain disruptions would leave shelves empty in November.

Meanwhile, amid heightened inflationary pressures, the Federal Reserve has turned more hawkish, as its December minutes show. SPG Global expects ‘liftoff’ to start in May with the first of three rate hikes this year. Depending on the data, balance-sheet normalisation will likely start in early 2023.

Fibre2Fashion News Desk (DS)



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