Despite the fact that consumer spending is expected to rise this year, retailers are having a hell of a time trying to pay the cost of their rising rents.
In fact, according to a new report by Bisnow, 34% of small retail businesses were unable to make their rent in April. This number was up 6% from February, the report says, citing survey data from Alignable.
Among reasons for not being able to meet their financial obligations, retailers noted inflation, gas prices, supply chain issues, labor shortages and reduced revenues.
National Retail Federation Chief Economist Jack Kleinhenz has argued that inflation is going to subside and that retailers may not have to worry about shoppers pulling back. His organization predicts "retail sales for 2022 will rise between 6% and 8% to between $4.86T and $4.95T".
We'll take the 'under' on that number.
Kleinhenz continued, stating that "underlying strength and momentum from both the consumer and business sectors are likely to offset a modest slowdown and should leave the economy bustling forward this year.”
Meanwhile, Bisnow writes that the Bureau of Economic Analysis' Personal Consumption Expenditures Index, a widely tracked measure of consumer inflation, hit 6.6% in March.
"How much and how fast the Fed raises rates will, of course, depend on how the economy performs in the months ahead. While policymakers would like to raise interest rates gradually, more aggressive action may be needed and appears to be the direction that will be taken," Kleinhenz concluded.