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  • The National Retail Federation (NRF), the world’s largest retail trade association, forecast earlier this year that holiday sales during November and December will grow between 8.5 percent and 10.5 percent over 2020 to between $843.4 billion and $859 billion. Due to continued consumer demand, with holiday shoppers expected to spend an average of $998 this year, holiday sales now have the potential to surpass this record spending level.

     Jack Kleinhenz, NRF’s Chief Economist, and Katherine Cullen, NRF’s Senior Director of Industry and Consumer Insights, discuss the 2021 holiday forecast and influencing factors  such as supply chain disruptions, inflation and the new COVID-19 omicron variant, in addition to changes in consumer behavior in recent years.


MODERATOR:  Good afternoon, and welcome to today’s New York Foreign Press Center briefing.  My name is Daphne Stavropoulos, and I’m today’s moderator.   

It’s a pleasure to introduce our speakers from the National Retail Federation.  Jack Kleinhenz is NRF’s chief economist, and Katherine Cullen is a senior director of industry and consumer insights, and they will discuss the 2021 holiday forecast, influencing factors such as supply chain disruptions, inflation, and the new COVID-19 Omicron variant, in addition to changes in consumer behavior in recent years. 

This briefing is on the record, and the views expressed by briefers not affiliated with the Department of State or the U.S. Government are their own and don’t necessarily reflect the views of the U.S. Department of State or Government. 

Following our speakers’ opening remarks, I will open the floor for questions.  And if you have a question, go to the participant field and raise your virtual hand, and wait for me to call on you.  When called on, please enable both your audio and your video and identify yourself by your full name and your outlet. 

And with that, it’s my pleasure today to introduce Katherine Cullen as our first speaker.  Thanks, Katherine. 

MS CULLEN:  Thank you, Daphne, and good afternoon, everyone.  Thank you for joining us today.  As Daphne mentioned, I lead our consumer and industry insights here at NRF.  The data I will be talking about comes from a series of consumer surveys that we conduct throughout the holiday season.  We’ve been doing so for well over a decade.  So we have some good trending data.  We conduct four surveys between October and early December that deal with how consumers are shopping, how they’re feeling, where they are in their holiday shopping journey. 

I’m going to touch on some of the key highlights of what we’re seeing so far, but if you are looking for more information, all of this is available on our site,  We have a winter holiday headquarters where you can download some of the data and look at it in more detail.  We also have some slides up there too, if that’s helpful to folks. 

So just in terms of where we are, so as of early December we are in a very different place with COVID than we were a year ago.  We are starting to see consumers carrying out some of the more permanent shifts in their behavior that have occured as a result of the pandemic, but also starting to resume some normal activities.  Obviously, the new variant causing some uncertainty, but we are seeing people make holiday plans, travel plans, and as Jack will speak to, spending expectations are very strong for this season. 

We are expecting on average that consumers will spend around a thousand dollars for the holiday season specifically for gifts, holiday décor, food, and then other holiday-related purchases they might make for themselves or their families.  Those are things like a new – new apparel for a holiday gathering, or things like that.  So we look at a very small basket of goods when we’re estimating what people will spend on a per-person basis.  Jack’s numbers cover all retail sales during the months of November and December, in contrast. 

This is very on par with where we’ve seen consumer spending over the last five years.  It does fluctuate a little bit; it was down – it was on par with last year, down a little bit from 2019, but again, very much in line with where we’ve seen the last five years, which is a good signal for where we are in the economy and how consumers are approaching the holidays. 

When we look at what’s different this year, we do see that consumers were much more likely to start their shopping earlier in the season.  As of early November, 61 percent of consumers had already started their holiday shopping, which is up from about half a decade ago.  So this is a shift we’ve been seeing over time that people are starting early, but it’s been accelerated by the pandemic.  People have wanted to spread out their holiday shopping, spread out their budget.  In addition, all of the news around supply chains and supply chain disruptions was very much top of mind for consumers, and so we saw them starting that holiday shopping early.  Retailers also started their deep discounting for Thanksgiving weekend early.  And all of that has led to sort of a little bit of a shift in the holiday shopping season to start well before Thanksgiving weekend. 

Fast-forward to where we are today.  As of early December, 8 in 10 consumers have already started their holiday shopping, and they’re about halfway done on average.  This is about where they fall, typically.  So there is still about half of shopping left to do.  The difference we see is that consumers are much more likely to say that they’re wrapping up their holiday shopping more than a week before Christmas.  It’s about 42 percent plan to buy their last gift more than a week before Christmas, in contrast to typically over the last decade it’s hovered at a little bit more of 30 percent.  So we are seeing consumers, whether it’s because of supply chain disruptions or because they started their shopping early, they are looking to end and wrap up their season a little earlier than normal. 

With that said, we are expecting a strong turnout as we look at Super Saturday, which is the last Saturday before the Christmas holiday.  This year it falls a full week before Christmas, which can impact people’s plans, but we’re expecting around 150 million consumers to shop on Super Saturday, both in stores and online.  This is actually down just slightly from last year, though last year, Super Saturday came a little bit closer to December 25th, so there was a little bit more of an urgency there.  But it is higher than it was pre-pandemic, so we are seeing and expecting a strong turnout. 

Consumers are more likely to say they’ll be shopping in-store, but a fair amount are still saying they plan to shop online on Super Saturday.  That is a number, by the way, that we do expect could change because a lot of that online shopping may run into shipping deadlines, and so we may see some of that activity move back into stores.   

Speaking of shipping deadlines, there’s been obviously, as I mentioned, a lot of news and a lot of focus around supply chain disruptions.  The majority of consumers – about 70 percent – have said that they have been able to find items that they need and are looking for this holiday shopping season.  Again, starting early, giving themselves more time certainly helped play into that.  Of course, that does leave around 31 percent who have run into issues.   

But the thing we would note is that even when consumers do run into issues finding specific items, they are not canceling that gift; instead they are most likely looking for it somewhere else, they’re looking for a substitute, or they’ll give cash or a gift card.  But the most common activities are to look for another replacement.  I like to tell people my kids certainly wouldn’t understand if I told them that they weren’t getting a gift because of supply chains.  So I think this is something that consumers want to have something to gift around the holidays.  They will find something, even if their first choice isn’t available at their first location. 

We’ve also obviously been hearing a lot about price increases.  Consumers are mostly seeing the impact of that around – at least in our survey work – around groceries and around gas.  A little less when it comes to items that they’re gifting this holiday season.  So just something to keep in mind.  That doesn’t mean these categories won’t be impacted in the future, but at least in terms of what we’re seeing so far, consumers are saying they’re mostly seeing it around food items and around fuel.   

We do expect, by the way, that we will see around two-thirds of consumers shopping the week after Christmas.  This is traditionally a big time for holiday sales, or post-holiday sales.  People go out to make returns or exchange items or pick up, if they didn’t get exactly what they wanted, maybe a gift for themselves.  So we do expect to continue to see some strong momentum through the rest of the year as people take advantage of those. 

The last thing I’ll just touch on is just that we do see there is a little bit of a sense among consumers that they’re trying to make up for last year.  They are intent on making the holidays feel special.  I think a lot of people are feeling safe in terms of family gatherings because of vaccination rates.  Obviously some parts of the country are being impacted differently than others, and things could certainly change in the next couple of weeks.  But everything we’re seeing so far is that consumers want the holidays to feel special, and they’ve been spending and shopping to help make that happen.   

With that, I’m going to turn it over to Jack to talk about some of the broader macroeconomic issues we’re seeing. 

MR KLEINHENZ:  Well, thanks a lot, Katherine.  You set the table very well for my comments.  What do we have, about 11 days or so before Christmas itself.   

Let me backtrack a little bit before we start looking at today and going forward.  And I would refer you to our website.  We did a release on October 27th on our forecast, and there’s a lot of information underpinning our forecast and what details we had that support the forecast.  But just to kind of summarize, back then, which it doesn’t seem like it was that long ago, we did expect holiday spending to have the potential to increase and actually shatter previous years’ records.  Between eight and a half and ten and a half percent, or about 843 billion to 859 billion.  And I want to point out, we exclude autos, gasoline, and restaurant spending in our numbers.   

And again, just to repeat what Katherine mentioned, much of the survey work that we gather from the Retail Federation on holiday spending is a small portion of retail, although it’s a significant amount.  We do include in our forecast really non-gift items – it could be discretionary and non-discretionary items.   

And so about – by the way, just comparing it to last year:  Last year was also a very significant increase – it was 8.2 percent, 777 billion.  And if you look back for the last five years, it was about a 4.4 percent increase.  So we have the possibility of really at least doubling, and then more, this year.   

Then, about 10 days ago, we updated our outlook.  And again, I’ll refer you to our website; under the monthly economic review we have more details about why we changed our forecast – actually didn’t change it as much as we just expanded it.  We believe that we’re in a more favorable position in the economy and we’re seeing strength in the economy, and also with the consumer total retail sales could gear up as much as 11.5 percent during the months of November and December.   

So that’s another point I’d want to make, is that we’ve been measuring retail sales for holiday spending – that is, during the months of November and December – but we also recognize this year and also last year people have moved up their shopping trends into the month of October, and it actually has been somewhat of an important point in reference to how the holiday goes is based on that we had early shopping. 

Now, our initial forecast that I mentioned that we did in October, we really were relying on late summer data.  And as you’ll recall, the economy was actually flickering around.  The GDP number, which we didn’t get until right before Thanksgiving or at the end of October I guess, was much weaker than what we had seen, and that was largely due to the Delta virus, and that really squeezed spending down.  But yet, it didn’t squeeze it out that much for retail spending.  We continued to have very strong data.   

When we look at the most recent retail data sales report, which is October, October sales were up on a month-to-month basis 1.7 percent – that’s pretty strong – and 16.3 percent on a year-over-year basis.  And all categories were up across the board, so we’ve had a lot of strength throughout this year, and that momentum is important as we move into the last weeks, or even if we think about the holiday season. 

Now right before Thanksgiving we also had some key data that was released on the health of the consumer, and that included nominal income spending – excuse me – nominal income, which include wages and salaries, and those were up.  Disposable personal income was up 4.1 percent on a year-over-year basis and consumer spending at that point in October was up 12 percent on a year-over-year basis.  So you can see the strength of the spending is really important as we go into the holiday season, and as we’ve been watching very closely. 

And when we look at consumer spending, it doesn’t appear that the spending has been hampered significantly, despite the price increases that have occurred.  Now, when we look at the ability to spend that comes from income and savings and other wealth, and income has been relatively strong through most of the year, although it has – its pace has dampened in the last couple of months – excuse me – and the savings rate has been reduced from about 8.2 to 7.3 percent, but that was just for the month.  You have to remember that there had been a stockpile of savings that occurred throughout 2020 and 2021, some of it due to stimulus money. 

Now, we don’t have that stimulus money, broadly speaking, as we did.  We still have unemployment benefits and childcare benefits that are helping to support.  But nonetheless, when you look at spending by consumers across the board, it has been significant since January of 2020.  Let me just quote you a couple of numbers.  Total spending by all customers from January 2020 until – actually this data is through November 14 – it’s up.  Total spending is up 24.7 percent.  That’s significant at that amount and that level.  And what might be surprising for you to hear is that the low-income cohort is up even higher; they’re up to 27.7 percent over that period of time, almost two years. 

And when we look at retail spending as compared to total spending, retail spending is up 37 percent for – across income.  So we see these data coming through and it is significant, and that’s partly a reason for – some of our reason for upgrading our forecast.   

Let me just go through a few more things I’d like to share with you.  We can’t count out the importance of what’s been happening in the job market.  Now, you probably have been following U.S. employment figures.  They were comparatively disappointing for the month of November with only 210,000 jobs.  But I just want to point out that this is seasonally adjusted data, and without the adjustment, without the adjustment would be approximately 770,000.  So I think 770,000 jobs during the month of November.  So those are the real ones when you think about it, and are important to me, because every job creates income, creates spending.  So when we start to see this momentum of jobs come along, even though it might be comparatively small relative to seasonal adjustment, it’s very important from our standpoint of spending.  

And let me just give you a couple of other points of reference.  If we look at the last six months – just the last six months of 2021 – on a seasonally adjusted basis, we had 3.7 million new jobs created.  On a non-seasonally, it’s a whole other million above that, 4.7 million.  So 4.7 million times income really creates the amount of spending that we think are important as we go into these final months. 

Now, this is even true for retail when we start looking at some of the data.  I know there’s questions, did we have enough people to go around.  We’ve been short.  The industry is considered very important; we’re on the front line of the economy.  We have about a million job openings and there are much more job openings than there are individuals that are on retail unemployment.  But again, just using those numbers which concern me is that the data for the BLS said that we lost 20,400 jobs during the month of November on a seasonally adjusted basis, but when you take out those adjustments, we actually gained 331,000 jobs.  So I think we have to consider what the underpinnings of what spending might be outside of maybe some of the concerns that the BLS uses for seasonally adjusting the data. 

Now, what about a little bit about inflation?  We have been concerned; consumers are worried about inflation.  University of Michigan sentiment has been measuring consumers’ attitude and prices have been number one on their – on the list.  It did improve a little bit in the most recent reading that came out, from 67.4 to 70.4, but I want to point out in my view that consumer sentiment is sort of accepted as a foreshadowing of consumer spending, but that’s not always true.  In fact, it just seems so disjointed right now, where we’ve had such strong spending, historic spending over this last few months, but at the same time, consumer sentiment has been even at pandemic lows.  So consumer sentiment plays only a limited index or a value index in some of our computation.  It’s more sort of expectations of what might be in the future, but it doesn’t have a real strong, strong strength.  And so much of the concern that I think it’s registering is on the inflation. 

So speaking of inflation, of course, if you’re following the national news, today and tomorrow is the meetings of the Federal Open Market Committee.  The Fed is certainly in a position to have to take some action given the amount of inflation, especially after we’ve seen a PPI that came out today which was considerably higher and higher than expected.  I’d kind of like to go with the Personal Consumption Expenditure Index rather than the CPI for a number of reasons that I could talk to you offline or send me an email, but I don’t have enough time to go into the details today.   

But when we looked at that data that came out for October, it was up 5 percent year over year, and that reflected both prices of goods and services, and largely driven, as Katherine was saying, by energy prices and food prices.  Energy prices were up 30.2 percent on a year-over basis and then food prices up 4.8.  And just to comment on Katherine’s belief – and I would say that the data kind of plays out – not all goods and services are actually moving at that same pace in lockstep or even in the same direction.  Core retail categories – and this comes from the Bureau of Economic Analysis, and it’s a number that doesn’t get really publicized that much, but it’s out there – it was only a 3.3 percent.  Now, 3.3 percent is still considerable compared to what we had been used to.  Actually, prices for retail goods were falling through much of the expansion, almost by 1 percent per year, so things got down to a pretty low level. 

And, of course, there’s a wide range of opinions on inflation and risk, and at this juncture, if you asked me what I think about inflation, I’d have to be honest about it and it’s not likely to cool down to or below the Fed’s target of 2 percent at any – right at this point, probably by late 2022 and into 2023, and that’ll have an impact on consumer spending as we go into 2022 depending upon how we see these numbers falling out. 

So let me just finish up with maybe three concluding comments.  First of all, very important, household finances are in excellent condition.  Despite the pandemic, consumers have had the wherewithal.  Their net worth has been increasing.  They’ve paid down debt.  They have increased their savings, their home values have increased, and certainly their investment portfolios have improved in most cases.   

Now, in the past – and I just wanted to maybe enlarge the comments about the Thanksgiving weekend – it used to be, as Katherine was saying, is that it really was the kickoff to the season.  And what has happened in the last couple years is it’s – that kickoff has really begun – and we’ve done it with full knowledge last year and this year – to get people out shopping early last year was to spread out so we weren’t in crowds and this year certainly to take advantage of spreading out probably purchases to allow for the inventory challenges that we’ve had. 

And, of course, amid all these considerations, the U.S. economy and the world economy is going to continue to be tethered to the COVID pandemic, and it will be for a while.  I don’t know how long it’ll last.  We don’t know.  Regarding the Omicron variant, it’s just too early for me to give you any clear answers on how it will impact the economy and retail industry in particular, and so I don’t think it has a direct impact on the holiday sales that’ll occur this year.  It’s just too soon.  We’ll have to wait.  Maybe it will, and the next couple of weeks we’ll find out more. 

But where we were compared to a year ago, we are really much further along.  Higher share of people are vaccinated and – of the population, and what we do know is that retailers spread – excuse me, retailers who are on the front line have been very assiduous in implementing procedures and protocols that protect consumers, their workers, and their communities.  And we really won’t know for a while how the omicron and delta virus is going to be impacting, but we’ll be watching closely. 

And final, just to have you follow us.  Tomorrow is the retail release for November.  We purposely picked today’s meeting to – date to talk about our forecast.  We’ll see what happens tomorrow, and that’ll be the first official holiday results, if we begin it in November.  And we’ll have you stay tuned until we get that data sometime early tomorrow, and we’ll probably have a release sometime perhaps before noon. 

And with that, I’ll conclude my comments, and let’s go back to Daphne. 

MODERATOR:  Thank you so much, Katherine and Jack, for those opening remarks.  We really appreciate them.  Let’s open the floor for questions.  If you have a question, raise your hand and wait for me to call on you.  You’re also welcome to type your question in the chat room. 

Alex, why don’t we go with you?  Please introduce yourself and your outlet.  Thank you.  

QUESTION:  Yes, thank you, Daphne, for doing this.  This is Alex Raufoglu from Turan News Agency of Azerbaijan.  I thank both presenters for very compelling presentations. 

Let me ask you a couple questions.  One is the news just started coming in (inaudible) that the President will not be extending the student loan relief and he confirmed that it will be restarting, I think, in February.  Do you think it will impact at all to the holiday retail shopping expectations? 

And two other questions:  What do you think that the retailers are – be doing – should be doing that they did not do in the past, given that this holiday – as you mentioned, the holiday season will see more consumers in stores after 18 months of COVID? 

And my last question might be a bit above your paycheck, but I can’t help but ask about the importance of security – cyber security because mobile experiences can’t be overstated, given the COVID experience, as many of us rely primarily on our phones, computers for online shopping these days.  What should retailers be focused on to make that experience as engaging and as safe as possible?  Thank you so much again. 

MR KLEINHENZ:  Okay.  Let me make sure I understood the first question because I wasn’t aware.  The President is not extending the student relief package that we had during the pandemic?  Is that my understanding?  

QUESTION:  That’s correct, yes.  That’s the news that’s coming in, that loan relief that we have seen extension twice, I think – so will not be extended as of next year. 

MR KLEINHENZ:  So I can only speculate at this time without reading the details.  I would suggest to you that it won’t have any impact on the holiday season, and I think you asked that question.  I think that students don’t tend to do a heavy amount of gift-giving.  I’ll leave that up to my colleague Katherine to maybe make a comment on that. 

What I do think may have some impact as we get into 2022 is it could have some bearing on back-to-school spending in general, but I really don’t have any data that I can suggest to you that I can hang my hat on.  I’m sorry.  It’s kind of a quick and dirty comment on my part, but I don’t think I’ll get in trouble saying it. 

The other two questions were something to do – what will retailers do differently in the future maybe, given what we do know from the COVID environment, and the second one was on cyber security.  And I’m sorry, I’m just not in a position to answer the third question.  That’s a little bit outside of my swing zone. 

But I think what we’ve learned is that consumers are very resilient, and we have learned to adjust given the environment, and we are dependent on the technology, and of course, the cyber issues that you have – you’re asking me a question on.  But I think that from a retailer standpoint, they’re learning how to adjust their playbook on discounting and promotion and advertising, and it’s a multichannel world and it’s really not e-commerce versus physical stores.  It’s really a combination of learning how to use all channels together and in concert.  We know that during the COVID, many stores were actually being used as distribution centers, because it got the goods to and closer to the regional demand.   

So I think that retailers are going to figure out that this is going to be something they’re going to want to continue into the future.  But there’s a number of things that I think I just will believe that we’re going to still have the after-effects for some time of COVID, and we really – in my mind, we just don’t know how soon that’s going to happen. 

I think one last point I would make on this comment is we know that what’s very interesting is that the Census Department collects business dynamics, the applications to run businesses, individuals.  And we are seeing a significant increase in the number of people planning or are opening retail establishments in the United States, much faster and higher than during regular times.  So I think what they’re learning as much as others is at how we can be successful.  And back into my earlier comment is that these consumers are out there, are resilient, and I think they’re flexible to understand what the environment is all about. 

Katherine, I don’t know.  Did you want to comment on anything I said? 

MS CULLEN:  Just to build a little bit on what you said around the second point about what we think retailers will be doing differently, we’ve talked a lot at NRF very publicly about how the pandemic accelerated a number of consumer and retail trends that were already starting to build, particularly around delivery and fulfillment, the role of the store, contactless payment, and really this blending, as Jack brought up, of digital and physical. 

I think one thing that the pandemic really illustrated was something NRF has been saying for a long time, which is that consumers, even when forced to, don’t want to only shop online.  We have seen throughout the pandemic through groups that track foot traffic as well as through retail sales and talking to our members that when cases subside, when things reopen, people do return to stores.  And retailers have, of course, been at the forefront of making sure that their employees and customers have been safe, which I think has really spoken to the resiliency of the industry. 

And I think that has set the playbook, though, moving forward with retailers really focusing on both channels and on bringing both channels together.  Of course, there’s also been a rise throughout this of things like curbside and buy online/pickup in store, which is almost a – I mean, I hesitate to use the word omnichannel because it’s very overused, but it is a true blending of ordering online and then using the store for pickup. 

As we look to some trends we’re watching for next year that may be on the horizon as retailers sort of level-set with some of these services, really focusing on the next stage of digital engagement, whether that’s through things like livestreaming or social shopping or going back to kind of experiential – in-person experiences in the store environment, popups, parties, things like that, to really bring some of the inspiration and exploration aspect of shopping back both on the physical front and the digital front.   

So that’s just what I would add to what Jack said.   

QUESTION:  Thanks so much. 

MODERATOR:  Thank you so much.  The next question will go to Felicia.  Felicia Akerman, please, go ahead. 

QUESTION:  Hi, this is Felicia Akerman with the Swedish business daily Dagens Industri.  I was wondering if you could, looking beyond the holiday season a little bit and looking into next year, you talked about inflation potentially becoming an issue in terms of consumer spending.  I’m also interested in how you view the – this large stockpile of excess savings.  As you mentioned, lower-income households have been consuming more rapidly, but there are some indications that a lot of these excess savings that have been built up are actually concentrated in higher-income households with a lower propensity to consume.  So I’m just wondering a little bit about how you put those different pieces of the puzzle into your forecasts for next year and for consumer spending that’s sort of assumed to be this big driver of growth next year, and also how you view the labor market for retail specifically next year.  You mentioned 1 million job openings right now.  Do you see an easing in terms of getting more labor supply into the market for retail? 

MR KLEINHENZ:  Well, I’ll attempt to answer some of your questions.  We have not formulated our 2020*1 outlook, so excuse me for not being able to give you some of the answers that you’re looking for. 

Broadly speaking, I see a continued growth in the economy over the course of 2022, probably in that 4 to 5 percent range.  I think that the drivers of economic activity will remain the same in consumer, but I think what’s important that we’re going to see some help coming from the investment side of the economy.   

We’ve seen business fixed investment picking up.  What that does from a spending standpoint is there’s more jobs that get created, which creates more income and then therefore spending, and that’ll help satisfy the ongoing growth rate in consumer spending.  And I think as we are seeing wage and salary increases, that’s also going to have a net benefit in the ability for consumers to continue.   

And it’s really kind of difficult at this point to give you a lot of direction.  We are waiting on two pieces of very important policy when you start thinking about what’s going to happen with the fiscal policy that’s being debated in Washington today, as well as what’s being considered in terms of monetary policy.  This inflation certainly is critical path.  As I mentioned, I think it will be around.  I do think it’s going to decelerate, but still a bit higher than the Fed’s targeted rate, which is around 2 percent. 

In terms of getting to unemployment, full employment, I think we’re going to be there very shortly.  And it’s going to put pressure, but at the same time I think it’s also going to increase the labor force – not sizably, but I think we should be able to gain some employment that has been sitting on the sidelines.   

And I think one other – a couple of things just broadly speaking, I think we’re going to start – we’re seeing good things in the manufacturing sector, which is important that – job-related, spending-related, but we’re getting back to where we’ll see inventories rebuilding.  And that will help to take some of the pressure off some of the price increases that we’re seeing because of the extraordinary amount of demand. 

On the question of savings, while you might be accurate in saying that there’s a lot more savings at the upper income, I don’t think we should minimize the importance at the lower income cohort.  They did not spend all of their money that they received from the federal government.  About a third of checks were used for paying down debt; one third was used for everyday expenses, but they did do some savings.  And that will – for them – won’t get stretched as far out as the higher income individuals.  But nonetheless I think at this point we will see also some movement towards services and away from goods spending, so that will take some of the pressure off the retail sector and probably modulate the growth rate to some extent.   

But it’s really hard to see right now until we know more about where this COVID is ending up.  But we’re seeing improvement in the services area.  People are traveling a little bit more.  They are taking vacations.  They’re doing some things in terms of entertainment, but it’s far off the pace from a normal period of time. 

But Felicia, that’s about the best I can give you at this point.  We just aren’t really at a point in our discussions to release any further identification of how we see the economy growing in 2022.  

MODERATOR:  Thank you.  We have time for one more question, and the question may build on your previous answers.  It comes in from Yan Jin in the chat from Caijing Magazine.  She just wants to know, do you worry about stagflation, if there’s anything more you want to add to your previous answer?  Thank you.   

MR KLEINHENZ:  Katherine, did you want to take that?  You’re laughing.   

MS CULLEN:  I will leave that in your court, Jack.  Thank you.  

MR KLEINHENZ:  No, I don’t worry about stagflation.  The economy is growing at a much faster rate than its potential right now.  And it will – we’ll see the pressure on prices, excess demand, and we’re trying to build up supply.  But stagflation as we knew it a couple, three decades ago is the economy just wasn’t growing.  I think the economy will grow.  One of the challenges we have to understand is what’s going to happen in our end of the labor market and how much growth can we expect in terms of growth from an increase in the labor force.  And of course, there’s the application of technology, too.  So I just don’t think that at this point that’s part of the conversation in my mind.  

MODERATOR:  Well, thank you so much.  We are out of time.  I appreciate both of our speakers participating in today’s briefing.  Today’s briefing was on the record.  I will share a transcript with everyone who is participating today, and it’ll also be posted on our website.  And with that, thank you so much.  Happy holidays and good afternoon.     

MS CULLEN:  Thank you, all. 

MR KLEINHENZ:  Goodbye.  Thank you. 

1. 2022

U.S. Department of State

The Lessons of 1989: Freedom and Our Future