The American economy cannot fully recover without the help of its consumers, who are the backbone of the nation’s economic strength. But rising inflation, commodity shortages, supply chain problems and rising coronavirus cases have left consumers in a difficult spot.
Consumer spending contributes about two-thirds of US gross domestic product, the broadest measure of economic activity. But consumer spending has been successful in some parts of the country as the Delta variant spreads.
The Federal Reserve said in a report last week that economic growth “slowed slightly to a moderate pace” over the summer, as worries about the coronavirus caused consumers to eat less and travel less.
In Atlanta, restaurants and retailers were having trouble meeting demand due to persistent labor shortages. In Chicago, consumer spending declined slightly, but remained at a high level, even at the time leisure and hospitality businesses suffered.
Inflation rose to a 13-year high over the summer, before moderating in July. But price hikes have affected everything from wood to used cars, and economists are worried that some consumers suffering from adhesive shocks may choose to skip shopping. Companies have problems with the supply chain and long delivery times, which further increase the price of some products.
Now schools are reopening and parents are getting ready for the possibility that their children may be exposed to the virus in class. Meanwhile, many companies are delaying their return to the office due to Delta. None of this helps consumer sentiment.
This week’s economic data, including retail sales and inflation, will provide a better idea of how the economy performed in August and how badly the Delta variant has affected the recovery. The economic recovery could continue at a slower pace for the rest of the year.
Is there a silver lining?
“For this summer, the biggest threat to the U.S. economy and financial markets was that the recovery would be so rapid and so strong that it would cause the economy to overheat. The speed bumps we’ve encountered this summer have significantly reduced this risk “. David Kelly, global chief strategist at JPMorgan Funds, wrote in a recent note to clients.
India has the next big thing in technology and could be worth $ 1 trillion
More than two decades ago, India began its transformation into a global source of IT, ushering in an era of wealth and job creation never seen before in the country.
Now, Asia’s third largest economy is poised for the next big technological frontier: reaching a new generation of software companies like Zoom or Slack.
Last year, companies spent an extra $ 15 billion a week on technology as they struggled to create safe remote work environments, according to a KPMG survey.
SaaS companies offer web-based applications that take care of everything from software security to performance. Some of the world’s best-known SaaS companies include Zoom, SAP Concur, and Salesforce, the American giant that owns the messaging app Slack.
The Indian software industry as a service could be worth $ 1 trillion by 2030 and create nearly half a million new jobs, according to a recent report by consulting firm McKinsey & Co. and SaaSBoomi, a community of industry leaders.
There are about a thousand of these companies in India, of which 10 are unicorns or startups worth at least $ 1 billion, according to the report.
“This can be an opportunity as big as the IT services industry in the 90s,” said Girish Mathrubootham, CEO of Freshworks, India’s best-known SaaS company.
Until next time
Monday: OPEC Monthly Report; Oracle Earnings
Tuesday: American CPI; EU industrial production
Wednesday: Energy Information Agency data on U.S. crude inventories
Thursday: Retail sales in the US and unemployment claims
Friday: University of Michigan Consumer Sentiment Data; EU inflation