Nine months is an eternity for the American economy. The past year has proven that. The jobless rates early last year had not recovered from the COVID-19 recession. Today, the jobless rate has fallen well below 4%. By the same token, a year ago, inflation was nearly as benign as over the previous decade. Inflation, however, has moved closer to 10%, based on year-over-year figures in the consumer price index.

Some economists see a recession on the horizon that will start soon and could persist for several quarters. Inflation has eroded the buying power of millions of Americans who do not have wages that have grown at the rate of car, oil and food prices.

No other period of the year matches the holiday season as a barometer of economic health. If there is a time when Americans turn out by the tens of millions to empty their pockets, it runs from October through the end of the year. Retail sales have risen annually for at least five consecutive years. This, in turn, has forced retailers and transportation companies to add hundreds of thousands of jobs.

If price increases erode consumer spending as the year wears on, the crippling effects will show themselves throughout the summer and will ruin much of the economy in the final quarter of 2022. If pessimistic economists are correct, jobless numbers will shoot above 5% again, and spending among those who remain employed will be muted.

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Holiday sales recently have posted a pattern of 5% to 7% gains. E-commerce numbers have risen even more. The retail industry, and industries that supply it, could experience financial reversals they have not and will not prepare for. The bounty has been too good for too many years.

Happy holidays? Perhaps not in 2022.

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