Manufacturers may fall short of realising the optimum capacity to deliver goods and services.
While the pandemic forced consumers worldwide to go easy on spending, customer attitudes are now slowly rebounding from earlier lows. People are now set to spend more in 2022, thanks to both their earnings and cash transfers from the government in 2020 and 2021. However, consumers were aware that the stimulus money would not last them forever.
The realisation is the reason why most customers saved up on their stimulus payments. Nonetheless, with less debt to deal with and to encourage savings, people are ready to spend. Consumers are likely to resume dining out, travelling and attending concerts. Similarly, they might upgrade food and other staples too.
However, consumers’ increased capacity to spend may outdo businesses’ capacity to deliver goods and services. Prices are likely to rise; discounts and promotional sales are likely to disappear. Additionally, sectors that enjoyed sales uptick during the pandemic will record flat sales.
[4 minute read]