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Extra Features and Video Online FloristsReview.com R E A D O N L I N E 35 A After two years of frenetic activity and a post-pandemic recovery, retailers will likely confront a tougher operating environment in 2023. Growing headwinds include rising infl ation, higher interest rates, a softening housing market, continuing supply-chain disruptions, declining capital investments, and escalating costs for wages and energy. "2023 is likely to be a challenging year for retailers," says Scott Hoyt, Ph.D., senior director of consumer economics for Moody's Analytics. "We are projecting growth of only 2.8 percent, well below the sector's historic 4.3 percent average." e forecast represents a decline from the 8.3 percent increase expected when 2022 numbers are fi nally tallied. e recent trend is well below 2021, with its 17.5 percent increase fueled by a consumer shift away from services and toward goods. "Of the many factors weighing on growth, the biggest will be a slowdown in infl ation, since retail activity is measured in nominal terms," says Hoyt. Moody's Analytics forecasts that by the end of 2023, infl ation will have declined from 8.2 percent in October 2022, when this article was written, to the 2 percent target hoped for by the Federal Reserve. Infl ation is kind of a two-edged sword because it helps raise merchandise prices while dampening shopper behavior. While retailers will be hurt by a decline in infl ation during 2023, rising prices have not been a panacea in 2022. "Infl ation is particularly pernicious for retailers right now because it is running higher today for goods than for services," says Hoyt. " at has been encouraging consumers to switch to more spending on the latter." As for the current state of shopper psychology, it remains as unsettled, as it was a year ago. "It's hard to get a handle on consumer confi dence right now," says Hoyt. "If you ask people about their fi nances and they think about the stock market or gasoline prices compared to a year ago, they're really depressed. If you ask them about the labor market and their job situation, they're feeling pretty good." Other factors that will weigh on retail activity in 2023 include the loss of some helpful economic initiatives. "Government stimulus packages, ultra-low interest rates and strong money supply creation had been helping to compel business activity until mid-2022," says Anirban Basu, Ph.D., J.D., chairman & CEO of Sage Policy Group in Baltimore, Md. "All those fundamentals have been inverted." e deceleration in retail operations is echoed in the larger economy. "We expect real Gross Domestic Product [GDP, the monetary value of fi nal goods and services—that is, those that are bought by the fi nal user— Government stimulus packages, ultra-low interest rates and strong money supply creation had been helping to compel business activity until mid-2022.

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