Unemployment and inflation: factors complicating US sales ahead of the holidays

First modification: 11/19/2022 – 03:55

The sales of large stores in the United States were not positive in the third quarter of this year. Companies such as Target, Home Depot or Amazon registered a decrease in their sales, blaming the high inflation in the country, which in turn squeezes the pocket of citizens and makes them reduce their purchases of their products.

Earnings for Minneapolis retailer Target fell by 52% between July and September of this year and its managers begin to maneuver with the figures so as not to affect the sales of the holiday season.

The company’s executives announced that they aim to save between 2,000 and 3,000 million dollars in the next three years and hope that this goal will be met without cost cuts or massive layoffs.

To discuss the issue, Alberto Bernal León, Director of Global Strategy at XP Investments spoke with France 24 in Spanish to understand the behavior of buyers that is reflected in financial results.

“I think that what we are seeing from the results of the large chains in the United States is quite logical. We are really still experiencing a global scenario that none of us thought would happen because none of us had experienced a pandemic. For this reason, Families in the United States used this opportunity to make purchases of durable goods that they normally would not have made (televisions, furniture, appliances, etc.), people did not spend on restaurants and trips, so they had more money to spend on durable goods and they What we are seeing is the hangover of that excess (…) The truth is that if you bought a television two years ago, you would not buy another new television at this time,” explained Bernal.

And it is that the inflation of the first economy in the world has been one of the main reasons why analysts cannot decipher what will happen in the last quarter of the year. Americans are consuming what is strictly necessary and large companies are reducing their investment for this season.

In contrast, the US inflation rate in October came in below expectations at 7.7% year-on-year from 8.2% in September. A small victory that President Joe Biden was quick to celebrate but that economists say should be taken with caution.

To this panorama is added that of job vacancies. This year the country reached what many experts called ‘the great resignation’, alluding to the number of vacancies available in the face of low market demand.

“In the United States there are still 10 million job vacancies open, who are not finding people to work, so I think those options are going to decrease, companies are removing job offers, there are others who are laying off, but I think we have started at an extreme level of employability, therefore, this decrease in employment will cause problems in some families, but it will be different from what was seen during the pandemic or in the 2008 crisis,” Alberto Bernal said in an interview. .

And it is precisely that this is another of the factors that will have to be analyzed in the coming months by the experts, since after the December season and after the effects of the pandemic, the war in Ukraine and inflation, it is expected that the group of unemployed people return to the jobs that are still available.

“22% of young people in the United States between the ages of 18 and 24 are neither studying nor working. What is happening to these people? I have no idea, I don’t know what those people are doing. I don’t know if they are playing Xbox, watching Netflix, if they are trading, I have no idea what these people are doing, but as an analyst the only thing I can predict and think is that these people are eventually going to stay. out of money and they’re going to have to go back into the workforce.”

Meanwhile, big tech companies like Amazon, Twitter and Meta, advanced massive layoffs due to regular company returns.

with PA