Thread by @bopinion

The great rotation in consumer spending continues.

In 2020, we bought what we needed to stay home. In 2021, our shopping reflected reopening.

Consumer sectors are now facing another shift in habits. This one may not be as favorable trib.al/Njl4mne

The omicron variant is a headwind for travel, hospitality and retail. Even if the latest wave of infections peaks, there are perils ahead:

💰 Lockdown savings being exhausted
💰 Prices rising
💰 Tighter monetary policy and higher borrowing costs trib.al/FZzPDn9

It’s not just the new variant weighing on shoppers’ minds. U.S. retail sales rose less than forecast back in November.

The real concern is that rising prices have finally begun to take their toll trib.al/FZzPDn9

Up to now, consumers have been able to withstand accelerating inflation on everything from coffee to coffee tables.

Many were flush with savings after being homebound for much of the past two years.

But reopening economies drew down that cash trib.al/FZzPDn9

Prices are rising at an even faster clip. Most consumer-goods companies are already negotiating price hikes with retailers or will start in January.

With inflation coming through in commodities from oil to packaging, it will likely lead to further spikes trib.al/FZzPDn9

Although wages are increasing too, U.S. inflation is outpacing it by some distance: The gap between the two is the biggest it’s been for more than 20 years trib.al/FZzPDn9

Many people spent big during the pandemic, especially on new homes. This might be another source of weakness as interest rates rise.

Higher borrowing costs are expected in 2022, which could lead Americans and Europeans to pull in the purse strings trib.al/FZzPDn9

There are some silver linings.

Although the arrival of omicron is hurting travel and leisure, it may, in the short term, ease some of the forthcoming consumer pain.

Working from home again means saving money on commuting and lunches out trib.al/FZzPDn9