The economy’s post-lockdown resurgence is losing momentum.
It was bound to happen. It has been an impressive surge. For months, the growth in sales and employment have broken records, as has the pace of new business formation. This recovery will continue. That is as certain as things get in economics. But it will slow. That is the message of the most recent flow of data.
Some blame supply-chain problems. This is a favorite focus among the authorities in Washington. No doubt, shortages and delivery delays have put a crimp in sales and even hiring. But what is happening now is more fundamental. Any snapback from an artificially constrained situation, as the pandemic was, will lose momentum and slow once it recovers the ground lost to those constraints. That is where the U.S. economy seems to be as it moves into 2022.
Probably the most telling figures come from the Federal Reserve’s industrial production report and the Commerce Department’s tracking of retail sales. In December, the Fed calculated that overall production of finished goods in the United States fell 0.7% from November’s level. Though an outright drop, this piece of information is less a sign of general decline than of a moderating average rate of gain. The same could be said of December’s 1.9% decline in retail sales.
Of course, month-to-month figures can give false signals. Seasonal adjustments used by government statisticians can distort at any time but with retail sales that is especially true around holidays. This kind of statistical distortion is, however, less a problem when it comes to the tracking of new business formation. And these statistics, too, point to a slowed recovery momentum.
In December, nation-wide applications to form a new business totaled some 418,000, a drop of 2.8% from November’s level. Applications to form businesses that plan to hire workers and pay wages fell an even steeper 5.6%. Some regions of the country faired better than others, but declines were universal – in the northeast, the Midwest, the south, and the west.
France Dernières Nouvelles, France Actualités
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