[ad_1]
Amid a decade-long sea of inflation, business leaders and consumers alike find themselves in troubled financial waters. Rising interest rates, coupled with labor and supply-chain shortages, are prompting many to fear a recession is looming.
In this environment, with consumer prices rising, some companies are looking at profits while others are shedding a bleak economic outlook. While some leaders fail, others anticipate growth.
Sarah Vetch: ‘It’s no secret that 2022 will bring its challenges.’ JPMorgan Chase & Co
At JPMorgan Chase & Co. in Melville. “It’s no secret that 2022 will bring its challenges,” said market executive Sarah Veitch.
According to the recent JP Morgan Chase 2022 Business Leaders Outlook, business leaders across the country are becoming more cautious about their economic outlook. More than 1,500 midsize business leaders participated in the survey, which was conducted between May 25 and June 10.
In the study, 19% of business leaders expressed optimism in the national economy for the next year. That percentage is the lowest percentage recorded in 12 years of survey data, down from 75 percent a year ago.
The survey found that June consumer prices rose 9.1 percent from a year earlier, amid declining consumer optimism. It marked the highest annual increase since 1981. And last week, the Labor Department reported that the U.S. producer price index — which measures inflation before it hits consumers — rose at its fastest pace since hitting a record 11.6 percent in March.
Last month’s wholesale inflation jump was led by energy prices, which rose 54 percent from a year ago. But excluding food and energy prices, which can fluctuate significantly from month to month, producer prices rose 8.2% in June from June 2021. Month-on-month headline inflation rose 1.1 percent from May to June, the biggest increase yet. Jump from March.
Last week’s report on wholesale prices came a day after the Labor Department said rising prices for gasoline, food and rent pushed consumer inflation to a four-decade high in June, putting more pressure on households to seal the case for another big interest rate hike. At the Federal Reserve.
Still, there are business leaders on Long Island who are “more optimistic about their individual companies and growth opportunities,” Veitch said. “It’s a testament to their ability to control strategic decision-making.” And many of these businesses are “well-run and nimble” and able to adapt to change, Veitch said.
Covid has forced businesses to find new efficiencies, and some have become more innovative in the process, Veitch said. For example, one owner strengthened delivery routes to address labor shortages. That change allowed the business to “deliver the same amount of goods in a significantly shorter period of time, which allowed it to serve more customers,” she said.
Meanwhile, consumers face higher prices for goods and services. Rising commodity prices — oil, energy and agricultural products, among others — are driving up costs, experts say.
At the same time, some major corporations are reporting record profits.
Martin Melkonian: ‘Part of the price increase is due to increased costs’ during the Covid period. Courtesy of Hofstra University
“Part of the price increase is due to the price increase that occurred during the Covid period,” said Professor Martin Melkonian, a professor of economics at Hofstra University.
Then the war in Ukraine led to the U.S.’s countermeasures, “intended to hurt the Russians, but almost to the detriment of the United States and the world as a whole,” especially in relation to recent price increases for oil and natural gas in Europe, Melkonia said.
Fertilizer, which is essential for food production, is now also in short supply, “so the price of food is going up,” Melknonian said.
“On top of that is the profit-making element,” he said, referring to monopoly-type industries that can increase prices. And that could continue to the extent that companies can get away with it, he said.
Meanwhile, gas prices have dropped, initially due in part to the gas tax ban, which may be a “temporary phenomenon.” It could be worse if the Russians decide to retaliate economically by cutting off gas and oil to the West. It could lead to countries turning to dirty coal mining for “climate-unfriendly industrial energy – we’re already falling seriously behind”.
Still, Lundberg Research’s Trilby Lundberg recently noted that the continued decline comes as crude oil costs also decline.
Lundberg said in a statement: “Assuming oil prices don’t go up from here, drivers could see price reductions of 10-20 cents.”
But the Covid-fueled supply chain shortages that many thought would be over by now “are still there,” Melkonian said. And those shortages force people to pay a high price.
But when it comes to his business outlook, Veitch said companies with business-to-consumer models that are “closer to consumers” may be “a little more cautious about optimism.” However, the food and beverage sector “does well in many business cycles” as these “goods are always in demand.”
The business outlook in the Northeast is similar to that of the rest of the country, according to a recent Markum-Hofstra CEO survey.
Economic concerns, rising material/operating costs and talent availability are among the issues affecting their business plans, the study found.
“They were slightly more positive in their attitudes in the Northeast, but not by anything that would suggest they differed from the general sample,” said Andrew Forman, associate professor of marketing at Hofstra, who conducted the field research for the study. Research. The survey, conducted in mid-June, interviewed 254 middle-market CEOs with incomes between $5 million and $1 billion plus.
Still, 19.4% of those in the Northeast had a very positive view of the current business environment, compared to 15% of the overall sample share, according to the survey.
And they said that the increase in the price of gas in the Northeast has increased the operating costs by 55.2%. Another 22.4% said the increase has increased workers’ reluctance to return to the office. Just over 46% said it had reduced the amount of business travel. Another 37.3% said it caused delays in their supply chain. And 17.9% said that the increase in gas prices caused a decrease in income, while another 17.9% said that it did not directly affect their work.
Meanwhile, consumer prices in the New York-New York-Jersey City area rose 1.4 percent in June, mainly due to higher prices for energy and other non-food items, including new and used motor vehicles and medical care, the U.S. bureau said. Labor statistics.
Food prices rose 0.3 percent in June. Food prices outside the home increased by 0.8 percent. Food prices at home were flat, according to the BLS. Lower prices for fruits and vegetables, as well as meat, poultry, fish, and eggs, among other commodities, offset price increases.
Still, overall confidence is higher in New York than the rest of the country, and the New York state consumer sentiment index now stands at 61.7, down 6.3 points from the previous reading in the first quarter of 2022, according to a June poll by the Siena College Research Institute.
And despite higher prices at the gas pump and grocery aisles, consumers picked up their spending from May to June, showing resilience as they eased fears that the economy may be on the brink of recession. U.S. retail sales rose 1 percent in June, following a 0.1 percent decline in May.
But with shortages and raw material prices falling, can businesses blame rising costs on inflation? For some companies, it may vary based on the competition.
“It depends on how strong your market power is,” Melkonane said.
The Associated Press contributed to this report.
AGENN@LIBN.COM
[ad_2]
Source link
