Why this economy may be sturdier than it looks

Why this economy may be sturdier than it looks

Transcript¹

From inflation to the war in Ukraine, there seem to be plenty of reasons to worry about the economy these days, but things are looking pretty good for the busy Hotel Haya in Tampa, Florida.

Even with gasoline prices topping $4 a gallon, people are making the drive from neighboring states and flocking to the hotel.

"They've been saving their money during the pandemic, and now they want to get away, wherever it takes them," says the hotel's general manager, Peter Wright.

That may not be obvious from a new economic report card. The Commerce Department reported Thursday that the nation's gross domestic product shrank at an annual rate of 1.4% in the first three months of this year — a marked contrast from the final months of 2021, which saw some of the fastest growth in decades.

But economists³ say that's not as worrisome as it might seem. Consumers continue to spend freely, and businesses are still investing, despite the sharp drop in headline GDP growth.

"We should not take that as a signal of the direction of the economy," says Ben Herzon, senior U.S. economist² with S&P Global Market Intelligence. He notes that GDP was dragged down by a drop in exports, inventories⁴ and government spending.

"If we peel back a couple of layers and just look at underlying⁵ domestic demand, the economy looks to be picking up a little bit of steam," Herzon said.

Take Tampa. More than three-quarters of the city's hotel rooms were booked in mid-April, surpassing pre-pandemic levels, according to hospitality analysts⁶ at STR.

Strong demand has pushed the average nationwide price of a hotel room up more than 14% from 2019.

"We see a lot of staycations as well," Wright says. "There was a lot of pent-up demand, so we see a lot of local people coming for a few nights and enjoying the restaurant and the pool. They're looking to spend money."

"Buy and buy and buy"

While the omicron wave of coronavirus infections discouraged some people from traveling and eating out in the first weeks of the year, that has given way to what Herzon calls a "COVID spring."

"People are taking their masks off," he says. "They're getting back to consuming the services they were consuming before the pandemic. That's a pretty powerful push that will help to propel consumer spending — and GDP broadly — higher into the second half of the year."

At the Tulip Festival in Wamego, Kan., last weekend, Becky Rawls-Riley was showcasing a colorful collection of custom hats and scarves she makes.

"Everybody's back, which is great," she says.

Craft festivals are returning after a one- or two-year hiatus due to the COVID-19 pandemic, and that's a relief for Rawls-Riley, who depends on the events for both sales and customer feedback.

Sales were "gung-ho" in February, she says, but seemed a little softer in March and April.

"There are some who will buy and buy and buy," she says, while others are "watching their pennies."

Not everything is rosy⁷, of course

That's not to say the economy is without challenges. Supply chains are still tangled⁸, and employers are still struggling to find enough staff.

Rawls-Riley, for example, invested in new display racks this year, as well as industrial sewing equipment, but both were delayed by supply chain bottlenecks⁹.

"If you can make a product but you can't display it so someone sees what you have, you're in trouble," she says. She also increased her prices to offset¹⁰ the rising costs of cotton, polyester and spandex, as well as higher wages for her employees.

"You can't hold your price forever," she says. "It's just not possible."

A survey of small-business owners by SCORE, a nonprofit business-mentoring service, found that two-thirds were facing rising costs from vendors¹¹ and suppliers and that more than half had raised their own prices, on average by about 11%.

At Hotel Haya, Wright has also wrestled¹² with rising expenses and the challenge of recruiting workers. Hotels and restaurants have been adding workers at a rapid clip in recent months, but the industry still employs about 1.5 million fewer people than it did before the pandemic.

"A lot of people left our industry for a lot of reasons," Wright says. "We have to be more creative than we've ever been in the past because there's such a shortage in the hospitality industry."

Inflation is still a headache

With strong demand and a tight labor¹³ market, the U.S. economy is considerably¹⁴ hotter than Thursday's GDP figure might suggest — too hot, in fact, for the Federal Reserve.

With annual inflation hitting a four-decade high last month, the central bank has begun raising interest rates in an effort to cool demand. The Fed is trying to rein¹⁵ in prices without tipping the economy into recession.

"That's our goal," Fed Chair Jerome Powell said during a panel discussion last week. "I don't think you'll hear anyone at the Fed say that's going to be straightforward¹⁶ or easy."

The Fed raised interest rates by a quarter percentage point in March, and it's expected to follow that with a half-point increase next week. Higher borrowing costs are already weighing on the housing market, where mortgage rates now exceed 5%.

Pandemic lockdowns in China could also slow economic growth, potentially dragging out stubborn supply chain challenges and putting more upward pressure on inflation.

Economist Mark Zandi of Moody's Analytics has lowered his forecast for GDP growth this year to about 3% from the 4% he was projecting in January.

Still, he says the U.S. economy has proved remarkably¹⁷ resilient to one challenge after another.

"There's a lot of cash sitting in people's bank accounts, and that should help them continue to spend and navigate¹⁸ any kind of storm that's blowing through," Zandi says. "And clearly the Russian invasion and the higher gasoline and food prices and inflation is a storm."

1 transcript   

n.抄本，誊本，副本，肄业证书

参考例句：

• A transcript of the tapes was presented as evidence in court.一份录音带的文字本作为证据被呈交法庭。
• They wouldn't let me have a transcript of the interview.他们拒绝给我一份采访的文字整理稿。

2 economist   

n.经济学家，经济专家，节俭的人

参考例句：

• He cast a professional economist's eyes on the problem.他以经济学行家的眼光审视这个问题。
• He's an economist who thinks he knows all the answers.他是个经济学家，自以为什么都懂。

3 economists   

n.经济学家，经济专家( economist的名词复数 )

参考例句：

• The sudden rise in share prices has confounded economists. 股价的突然上涨使经济学家大惑不解。
• Foreign bankers and economists cautiously welcomed the minister's initiative. 外国银行家和经济学家对部长的倡议反应谨慎。 来自《简明英汉词典》

4 inventories   

n.总结( inventory的名词复数 )；细账；存货清单（或财产目录）的编制

参考例句：

• In other cases, such as inventories, inputs and outputs are both continuous. 在另一些情况下，比如存货，其投入和产出都是持续不断的。
• The store must clear its winter inventories by April 1st. 该店必须在4月1日前售清冬季存货。

5 underlying   

adj.在下面的，含蓄的，潜在的

参考例句：

• The underlying theme of the novel is very serious.小说隐含的主题是十分严肃的。
• This word has its underlying meaning.这个单词有它潜在的含义。

6 analysts   

分析家，化验员( analyst的名词复数 )

参考例句：

• City analysts forecast huge profits this year. 伦敦金融分析家预测今年的利润非常丰厚。
• I was impressed by the high calibre of the researchers and analysts. 研究人员和分析人员的高素质给我留下了深刻印象。

7 rosy   

adj.美好的，乐观的，玫瑰色的

参考例句：

• She got a new job and her life looks rosy.她找到一份新工作，生活看上去很美好。
• She always takes a rosy view of life.她总是对生活持乐观态度。

8 tangled   

adj. 纠缠的，紊乱的 动词tangle的过去式和过去分词

参考例句：

• Your hair's so tangled that I can't comb it. 你的头发太乱了，我梳不动。
• A movement caught his eye in the tangled undergrowth. 乱灌木丛里的晃动引起了他的注意。

9 bottlenecks   

n.瓶颈( bottleneck的名词复数 )；瓶颈路段（常引起交通堵塞）；（尤指工商业发展的）瓶颈；阻碍

参考例句：

• Roadworks are causing bottlenecks in the city centre. 道路施工导致市中心交通阻塞。 来自《简明英汉词典》
• At five o'clock in the afternoon the city streets are a series of bottlenecks. 下午五点市中心的街道就成了拥挤不堪的窄路。 来自《现代英汉综合大词典》

10 offset   

n.分支，补偿；v.抵消，补偿

参考例句：

• Their wage increases would be offset by higher prices.他们增加的工资会被物价上涨所抵消。
• He put up his prices to offset the increased cost of materials.他提高了售价以补偿材料成本的增加。

11 vendors   

n.摊贩( vendor的名词复数 )；小贩；（房屋等的）卖主；卖方

参考例句：

• The vendors were gazundered at the last minute. 卖主在最后一刻被要求降低房价。
• At the same time, interface standards also benefIt'software vendors. 同时，界面标准也有利于软件开发商。 来自About Face 3交互设计精髓

12 wrestled   

v.（与某人）搏斗( wrestle的过去式和过去分词 )；扭成一团；扭打；（与…）摔跤

参考例句：

• As a boy he had boxed and wrestled. 他小的时候又是打拳又是摔跤。
• Armed guards wrestled with the intruder. 武装警卫和闯入者扭打起来。 来自《简明英汉词典》

13 labor   

n.劳动，努力，工作，劳工；分娩；vi.劳动，努力，苦干；vt.详细分析；麻烦

参考例句：

• We are never late in satisfying him for his labor.我们从不延误付给他劳动报酬。
• He was completely spent after two weeks of hard labor.艰苦劳动两周后，他已经疲惫不堪了。

14 considerably   

adv.极大地；相当大地；在很大程度上

参考例句：

• The economic situation has changed considerably.经济形势已发生了相当大的变化。
• The gap has narrowed considerably.分歧大大缩小了。

15 rein   

n.疆绳，统治，支配；vt.以僵绳控制，统治

参考例句：

• The horse answered to the slightest pull on the rein.只要缰绳轻轻一拉,马就作出反应。
• He never drew rein for a moment till he reached the river.他一刻不停地一直跑到河边。

16 straightforward   

adj.正直的，坦率的；易懂的，简单的

参考例句：

• A straightforward talk is better than a flowery speech.巧言不如直说。
• I must insist on your giving me a straightforward answer.我一定要你给我一个直截了当的回答。

17 remarkably   

ad.不同寻常地，相当地

参考例句：

• I thought she was remarkably restrained in the circumstances. 我认为她在那种情况下非常克制。
• He made a remarkably swift recovery. 他康复得相当快。

18 navigate   

v.航行，飞行；导航，领航

参考例句：

• He was the first man to navigate the Atlantic by air.他是第一个飞越大西洋的人。
• Such boats can navigate on the Nile.这种船可以在尼罗河上航行。