Retail Forecast 2022: Choppy Waters, Favorable Winds

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Retailers should expect a deceleration of sales activity in 2022 as the economy heals and shoppers shift a growing portion of their disposable income back to restaurants and travel, industries that were devastated in the pandemic. A generally robust economy, however, should help buoy revenues. The beneficial effects of aggressive housing activity, high employment and growing wages should more than make up for the costs of crippled supply chains and pandemic-related labor shortages and inflation.

Retailers face a more challenging operating environment in 2022. After a year in which pandemic sequestered consumers spent heavily on the home and outdoor living, including aquatic leisure products, they are now expected to shift a greater portion of their disposable income to restaurants, theaters and travel — services that COVID-19 had largely put off limits.

“Our current 2022 forecast is for a 4.3% increase in core retail sales,” says Scott Hoyt, senior director of consumer economics for Moody’s Analytics. “That represents a historically average growth rate. Service spending, in contrast, is expected to grow by 9.5%.” (Core retail sales exclude the volatile auto and gasoline segments.)

While the 2022 retail sales forecast represents a considerable drop from the 16.1% spike expected when the previous year’s numbers are finally tallied, it is also fairly robust given the difficult year-to-year comparison. Helping to generate sales will be a healthy economy’s tailwinds of growing employment, rising wages, a booming housing sector and aggressive corporate investment.

“The nation is in the midst of an early economic recovery after the body blow of COVID-19,” says Bernard Yaros Jr., assistant director and economist at Moody’s Analytics. “Though growth will decelerate in 2022 due to fading effects from business re-openings and past fiscal stimulus, the economy will remain robust.”

The numbers tell the tale. Real GDP (Gross Domestic Product) should grow at a 4.3% rate in 2022, according to Moody’s Analytics. While that pace is a bit less aggressive than the 6% of the past 12 months, it remains decidedly sunnier than the 3.4% pandemic fueled decline of 2020. (GDP, the total of the nation’s goods and services, is the most commonly accepted measure of economic growth. “Real” GDP adjusts for inflation.)

Headwinds, of course, are inevitable. The coming 12 months will have their own troubling mix: The peekaboo pandemic. Labor shortages. Crippled supply chains. China tariffs. Unsettled consumers. Inflation.

Yet economists do not expect negatives to prevail. “While the Omicron variant is continuing to do some damage, we expect this wave of the pandemic to soon subside and for any future waves to be successively less disruptive,” says Yaros. “Labor and goods shortages will ease as the domestic and global economy increasingly learn how to live in a new pandemic normal.”


A crucial leading indicator for the pool and spa industry, housing starts, have been running about 20% higher than pre-pandemic levels, according to Moody’s Analytics. Buyers of new homes tend to purchase outdoor aquatic products, and the prediction for the housing industry activity is full steam ahead.

“Annual growth in housing starts will remain strong because of favorable demand-side factors, namely demographics and excess savings,” says Yaros. Increases for 2022 are expected to top 12.9% — very aggressive by historical standards and only lower than the previous year’s 15.3% increase because of temporary supply shortages.

Eager consumers are bidding up the prices of single-family homes, and a general easing of mortgage lending standards is helping grease the skids. Housing prices for 2021 are expected to jump 15.6% — a considerable improvement over the previous year’s 9.8%. These rising house prices are jet fuel for the home equity loans that finance many pools and spas, so the foundation of the pandemic leisure aquatics surge remains intact.


This generally favorable economic forecast is not without its clouds, however. As most retailers will attest, today’s ambitious hiring initiatives are colliding with a scarcity of candidates. “Our members are having difficulty finding enough workers, especially for entry-level jobs,” says Palisin. “The average time-to-hire has doubled from what it was prior to the pandemic. This will certainly impact our member’s ability to take on new work or provide on-time delivery.”

Nationwide job openings recently topped a record-shattering 11 million — a huge increase over the 7 million pre-pandemic level. “The No. 1 concern of businesses going forward will be finding qualified labor,” says Yaros. “There have never been so many open positions across every industry and government, but the need for more workers is especially acute in manufacturing, transportation, educational services, healthcare, and leisure and hospitality.”

The reasons for the scarcity are diverse. “There has been a significant drop off in labor force participation as folks were forced into retirement or are staying home to deal with childcare or other dependent care issues that are more difficult to handle in the current environment,” says Hoyt. Some fear the risk of workplace infections. Others are not finding exactly the job they want. And many pandemic-shocked people are reassessing their life missions and pursuing new ventures.

A number of factors may help relieve the labor crisis in 2022. These include the end of bonus unemployment insurance, a declining effect from stimulus payments, an abatement of infections and a return to in-person schooling.


The tight labor market is helping fuel another retail headache: the ongoing global breakdown in the distribution of goods. “The most important problem for retailers is a supply chain, which is still broken,” says Bob Phibbs, a retail consultant in Coxsackie, N.Y. “Smaller operators who lack buying clout are finding it especially difficult to get product.”

A lack of sufficient workers is often the root cause of supply chain disruption. When people aren’t available to do the work, efficient production and transportation fall by the wayside. Retailers are hurt when cargo ships pile up at ports, causing delivery delays and leading to widespread price increases for supplies.

Delivery disruptions may persist for some time. “Recently, a vendor told me they didn’t expect production to be back to where it should be until the middle to the end of 2023,” says Phibbs. “And the prices for components have gone up so much that in many cases, it is no longer profitable to keep making some products.”

The increased costs resulting from order backlogs and delivery delays are only exacerbated by the China tariffs. While retailers were expecting some relief from the Biden administration, so far there has been no move to change the status quo. “Tariffs on Chinese goods will likely continue,” says Conerly. “In fact, given the friction between the U.S. and China, it’s possible we could even get additional ones.”

The double whammy of supply chain disruption and China tariffs are causing some businesses to look at alternative regional or local sources. “Many businesses are no longer relying on any single supplier or global region for goods and services,” says John Manzella, a consultant on global business and economic trends, East Amherst, N.Y. “They are building more diversified and reliable supply chains. Instead of buying in scale from two very large Chinese suppliers, they might buy in smaller increments from a half dozen suppliers located in different regions of the world. They may also utilize more long-term warehousing facilities. This strategy, which adds costs but reduces risk, will be extremely beneficial in protecting against the next pandemic, black swan or trade war.”

Finding alternative sources, though, can be easier said than done. “Many businesses that would like to source domestically can’t find any vendor in the U.S. that can match Chinese prices,” says Conerly. “And Chinese companies have improved the quality of their goods significantly.”

Adding to this litany of woes is the Chinese government’s increasingly heavy-handed control of industry, says Palisin. “Some of our members are asking, ‘If we have a critical supplier in China, how likely is it that the government will step in and intervene in that company, which could impact us getting access to our components?’”


As retailers enter the early months of 2022, economists suggest watching a number of leading indicators for an idea of how the year will go. The first is the state of consumer confidence — a vital driver of cash register activity.

Given favorable wages and income trends, one might expect that consumers are feeling fairly good. In the closing months of 2021, though, the attitude of the American public was surprisingly unsettled. “It really is difficult to get a good sense of consumer confidence in the current environment,” says Hoyt. One reason, of course, is the unclear path of the pandemic. But another is the recent spike in fuel prices, sparking fears of inflation.

How the public reacts to the shape-shifting virus should be more apparent in the opening months of 2022. So should changes in the currency’s purchasing power. “Inflation will be the key financial statistic to follow early in the year,” says Yaros. Moody’s Analytics calls for the Core PCE Price Index to moderate to 2.2% in the fourth quarter of 2022 as the effects of past fiscal stimulus fade away. (The Core PCE Price Index excludes energy and food prices and is the Federal Reserve’s preferred measure of inflation.) Businesses should watch for any higher levels of persistent inflation that might cause the Fed to increase interest rates — a move Moody’s Analytics does not anticipate before 2023.

Yet another leading indicator will be the return-to-work trend. “More people getting back on the job would confirm a strong 2022,” says Conerly. “Are employers getting the workers they need? Are people earning more money to spend?”

Finally, one non-financial force may be more important than anything else. “The damage done by the Omicron variant has taught us that the pandemic is still alive and has the potential to disrupt economic activity,” says Hoyt. “Early in 2022, the leading data will be about COVID-19. What are the trends in vaccination rates? Infections? Hospitalizations? Deaths?” Favorable answers bode well for robust retail sales. 

This article first appeared in the January 2022 issue of AQUA Magazine — the top resource for retailers, builders and service pros in the pool and spa industry. Subscriptions to the print magazine are free to all industry professionals. Click here to subscribe.

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