THE SHOP

January '20

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6 THE SHOP JANUARY 2020 A slowing economy. Costly tariffs. Brexit angst. A presidential election. A shaky stock market. Rising labor costs. A looming recession. And happy shoppers. Those are the ingredients of a mind- bending cocktail of economic uncertainty now eroding business confidence and cap- ital investment. Despite full employment, robust consumer spending, low interest rates and a strong housing market, forecasters are predicting a challenging operating environ- ment for retailers in the year ahead. Should we be worried? SLOWING GROWTH "We look for the economy to grow below its potential in 2020," says Sophia Koro- peckyj, managing director of industry eco- nomics at Moody's Analytics, a research firm based in West Chester, Pennsylvania (economy.com). "Corporate profit mar- gins have been compressing noticeably as growth in labor costs has outpaced revenue growth. Shrinking margins are often associ- ated with late-cycle expansions and often cause businesses to be more cautious in hiring and investment." Moody's expects the nation's Gross National Product (GNP) to slow to 1.7% in 2020, down from a more normal 2.3% anticipated when 2019 numbers are finally tallied. The 2019 per- formance is a decline from the 2.9% growth clocked the previous year. (The GNP, the total of the goods and services produced by a nation, is the most commonly accepted measure of economic growth.) HAPPY SHOPPERS Retailers can count their blessings: Con- sumers seem largely content with the way things are working out and have been expressing their pleasure at the nation's cash registers. Moody's expects core retail Retail Forecast 2020 Shops should prepare for happy shoppers & slowing growth. By Phillip M. Perry Despite full employment, robust consumer spending, low interest rates and a strong housing market, forecasters are predicting a possibly challenging operating environment for retailers in the year ahead. Moody's Ana- lytics expects the nation's Gross National Product (GNP) to slow to 1.7% in 2020, down from a more normal 2.3% anticipat- ed when 2019 numbers are finally tallied.

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