As we move further into 2022, some of the working and spending trends established last year are receding. Public health forecasts are better than they’ve been in two years, and American consumers are eager to get out to shop, dine, and travel. But soaring prices, supply-chain disruptions, and labor shortages complicate the overall economic picture. Acknowledging some trends we’re seeing now can help small business owners prepare for what the next few months will bring so that their businesses can be ready.
In the midst of the economic challenges that we see and hear about on a daily basis, the latest data shows that both personal income and consumer spending saw increases during the beginning of 2022. Consumer spending increased in both January and February, as did personal income, although February saw more dramatic personal income gains. Some products and services that continue to have strong consumer demand include: motor vehicles and parts, home furnishings, utilities, food, clothing, and health care, among many others. But as inflation persists well into 2022, consumers have had to become flexible in their purchasing. This has led to the abandonment of a lot of brand loyalty because shoppers must prioritize items they can: A) find, and B) afford.
Demand for housing remains high, but the shortage of affordable homes has become increasingly severe over the last few years. The overall decline in the construction of entry-level, single-family homes—combined with the skyrocketing costs of building supplies over the last couple years (particularly lumber)—have contributed to a dearth of affordable housing units to meet the large consumer demand. Low supply is propelling the cost of existing homes upward, creating an affordability barrier for first-time buyers who may not have large down payments. A shortage of workers in the construction sector is exacerbating the housing scarcity, as construction companies struggle to add enough workers to meet the rising demand for home building.
The last two years saw an explosion in the number of people working from home, full-time or part-time, and many speculated that the traditional corporate office might become extinct this year. But not so, after all. While millions of workers have transitioned to new jobs and careers that offer the flexibility of working remotely, many companies have decided bring office workers back to the commercial space in order to optimize the culture of collaboration and collegiality that only in-person working can provide. Hybrid options, in all their varying forms, are cropping up to help generate compromises among executives who want more in-person working and the employees who have become accustomed to the benefits of working from home.
Data from the U.S. Chamber of Commerce indicates that many small businesses are still dealing with inflation and supply chain disruptions and struggling to find ways to adjust. According to the data, 85% of small business owners are concerned about inflation; 61% indicated that the pandemic and worker shortages have affected their supply chain.
The last two years saw a surge in retirements, with approximately 3.5 million people retiring, many of them earlier than they had planned. Some of them are back to work after only a short hiatus. Of course, there is no way to predict whether retirees’ return to the workforce is indicative of long-lasting trend or how long these “unretirements” will last, but as virus concerns ease while the costs of goods and services remain high, many older workers are compelled to reenter the workforce. For many who retired early, the desire to remain productive has led to a change of heart; the continual reevaluation of work/life priorities are driving some back to their professions to add one more chapter before leaving for good.
While workplace stress and feelings of burnout are in no way new, the tremendous personal health challenges of the last few years have put a renewed spotlight on workers’ mental health. Advice is all around regarding how to minimize stress at work and recognize the signs of burnout before becoming consumed. There is also growing pressure on managers and employers to create a workplace environment that is more sensitive to employees’ mental health—one that emphasizes wellness for employees and creates a culture where workers feel appreciated, valued, and respected. Offering location and scheduling flexibility, more time off, and access to professional mental health services when needed are all measures to help employees customize a more productive and rewarding work/life balance.