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Florists' Review - January 2024

Florists' Review Media Group has served the global floral in study for over 124 years.

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FloristsReview.com 53 HIGH INTEREST RATES AND SLOWER ECONOMIC GROWTH ARE EXPECTED TO PUT INCREASING PRESSURE ON RETAIL PROFITS THIS YEAR, BUT, ON THE BRIGHT SIDE, MANY ECONOMISTS EXPECT INFLATION TO DECREASE TO DESIRED LEVELS BY YEAR-END By Phillip M. Perry F asten your seat belts, and enjoy the ride. Like airline travelers bracing for expected turbulence, U.S. retailers are likely to experience a tricky operating environment in 2024. On the upside, the economy will continue to grow although at a slower pace. Unemployment remains low, capital investments are plugging along at a healthy pace, and the all-important housing market is burgeoning. On the downside, higher interest rates established by the Federal Reserve to control inflation are putting some downward pressure on business activity and shoppers' buying habits. Economists are taking note by lowering expectations for the next 12 months. "[is] year will continue to be a difficult environment for retailers," says Scott Hoyt, Ph.D., senior director of consumer economics for Moody's Analytics, a global economic analysis and forecasting firm based in New York, N.Y. "We're expecting 2.5 percent retail sales growth for 2024, [almost half of ] the 4.7 percent growth expected when 2023 numbers are finalized." When adjusted for inflation, Hoyt notes, retail sales are expected to be flat for both years. e slowdown comes on the heels of a healthy 9.3 percent retail sales increase clocked for 2022, a time when pandemic-era shoppers were still loading up on goods for their homes. ose days are gone, and retailers should expect shoppers to continue to spend more on services rather than on merchandise. Hoyt feels that spending on categories such as recreation, travel and entertainment is still below pre- pandemic levels. "I think we have another year in which the shift toward services is going to be something retailers need to deal with," he states. ECONOMIC SLOWDOWN Retail's current position is a reflection of a deceleration in the larger business environment. "We expect real GDP [Gross Domestic

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