Supply-chain Grinch eyes the holidays

The Delta variant surge in September dented what had been robust shopping

  
A woman shops at Macy's department store inside Roosevelt Field shopping mall in Garden City, New York, U.S., May 20, 2021. REUTERS/Shannon Stapleton

A woman shops at Macy's department store inside Roosevelt Field shopping mall in Garden City, New York, U.S., May 20, 2021. REUTERS/Shannon Stapleton

(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

WASHINGTON - U.S. consumers are still an economic bright spot, despite a slowdown in spending. Instead, it’s supply-chain snarls that will bring down the holiday cheer. They could dampen spirits into the next year too.

The Delta variant surge in September dented what had been robust shopping. Consumer spending rose 0.6% from August, compared to a 1% bump in the previous one-month period, the Commerce Department said on Friday. But consumers are expected to come back for the holidays as Covid-19 cases ease. The National Retail Federation on Wednesday projected record spending in the next two months, with a bump of up to 11% compared to last year.

Supply-chain problems will last longer. Such issues, including chip shortages, cost Apple $6 billion in sales in its last fiscal quarter and it may be worse during the holidays, Chief Executive Tim Cook told Reuters on Thursday. Amazon.com expects labor, inflation and supply-chain constraints to cost $4 billion this quarter.

Higher prices so far haven’t turned off customers, but hard-to-find iPhones and other goods could hike costs further, which could eventually take a toll on consumer confidence. With hiccups continuing in 2022, consumers and companies will feel the pain beyond the holidays. (By Gina Chon)

(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

(Editing by Jennifer Saba and Sharon Lam) ((SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS: https://bit.ly/BVsubscribe))


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