A Look at Post-Pandemic Business Recovery Through 2022
For business owners, staying in tune with the seasons requires focus, foresight, and planning. That focus is analogous to informed predictions that meteorologists make with the advantage of science and experience—helped along by weather satellites and radar. Sometimes they get it wrong as low-pressure areas linger longer, and that one-inch snow prediction becomes a blizzard.
Being a business barometer in the face of the unexpected…
Business cycles, fortunately, are usually less volatile—or more accurately explained after the fact—than the weather. The wild-cards in business are like unexpected low-pressure systems that can bring strong winds and a turbulent business climate.
The most recent and obvious example was the COVID-19 pandemic. What happened was traumatic, and its effects could be around for years. The pandemic prompted the largest government relief package in the US since the Great Depression.
One Brookings Institute report predicted that the “COVID-19 crisis seems poised to accelerate or intensify many economic and metropolitan trends that were already underway…” Those trends were in workplace automation, remote working, and further entrenching “big tech titans” like Amazon, Google, Microsoft, etc.
A Look at Post-Pandemic Business Recovery Through the Fourth Quarter
Pandemic long-term effects notwithstanding, another Brookings Institute report highlights the U.S. as having undergone “a most unusual recovery” as compared to Europe and Japan. The recovery has been “faster than GDP because (among other reasons) so much of the demand has been for imported goods.”
Based on pre-COVID “normal” times as the recovery continues, let’s look at some high-pressure economic conditions that quarters 1 through 4 in 2022 could bring for corporations.
Quarter 1-Slower growth than predicted
According to the Federal Reserve Bank of Philadelphia report, the U.S. economy looked weaker than predicted, “down 2.1 percentage points from the prediction of 3.9 percent in the last survey.” The better news is that “the panel expects real GDP will grow at an annual rate of 3.7 percent this year…”
Quarter 2-Hopeful signs for a Memorial Day Bounce
The Feds predict a strong 4.2 percent growth in GDP in the second quarter, coinciding with better weather and the Memorial Day holiday weekend. Memorial Day is not one of those “door-buster” days for all businesses. On the other hand, Memorial Day can rival Black Friday for businesses that rely on spring and summer product sales.
Based on pre-pandemic transaction trends analyzed by Womply.com, “as consumers prepare for their three-day Memorial Day weekend in May, they tend to give local business owners a significant boost in revenue.”
The week leading up to Memorial Day ranks as:
- the third-best week of the year for appliance and furniture stores
- the fourth-best week for local bars, gardens, and landscaping services, which led the pack with an uptick in the business of 45 percent
On Labor Day itself, appliance and furniture stores are overrun with bargain hunters with a revenue increase of 62 percent, compared to an average day.
Quarter 3-Early August Brings Sales Tax Holidays for Some States
The Sales Tax Institute describes a sales tax holiday as “typically running for three days but sometimes up to a week – where a state allows purchases of specific items to be made tax-free.” Sixteen states declare tax holidays, and tax exemptions are limited to maximum purchases and some restricted items.
States usually declare sales tax holidays a back-to-school” event to “include school supplies, calculators, and backpacks as tax-exempt items.” Many early August tax holidays include a broader range of items that can be tax-exempt.
K-12 and College Students Emerging from Quarantine
In 2021, parents spent a bundle on back-to-school supplies and new clothes for their kids. According to this CNBC news piece, average back-to-school spending expectations were nearly $700 per child in the 2021 school year.
Factor in inflation, and the supply chain has yet to recover. That figure could stretch to $750 and beyond for the school year beginning in August 2022.
The same holds true for spending on college students, but at a higher base rate of $1,059.20 per family. According to this U.S. News.com article, that price does not include the public, in-state average tuition, and fees amounting to over $10,338 each year–$38,185 for private 4-year universities– according to this U.S. News.com article.
The good news for college towns is that, barring a resurgence in the pandemic, local businesses depending on swarms of hungry and partying college kids could bounce back quickly.
College Student Interns Will Go Back to Class in August
Another seasonal planning factor for corporations must consider is the return of college interns during the third quarter. Zippia.com estimates that as of 2022, over 300,000 college students intern each year “in nearly every industry across the nation.”
Those internships “present an effective pathway for finding employment after graduation,” and “70 percent of interns are hired at the same company they interned with following their internship.”
Only 39.2 percent of internships in the U.S. are unpaid. The 60.8 percent who are paid earn a national average hourly wage of $20.76. After graduation, the majority (52 percent) of the paid interns will be offered a full-time job.
In the meantime, as interns go back to class, employers will have to take up the slack by redistributing the workload.
Quarter 4-The Need for 4th Quarter Business Planning
The end of the business year is the calm before the storm. The year’s cold months of October through December bring 4th quarter opportunities for increased sales. Consumers think about Thanksgiving and everything between that holiday and New Year’s Day, including Christmas and Kwanzaa.
For the fourth quarter of 2022, the Fed predicts real GDP growth of 2.9 percent and an unemployment rate of just 3.5 percent. Customers are ready to buy more. As memories of the pandemic fade, according to Inpmediagroup.com, “various retailers and service businesses may be well-positioned to benefit from pent-up demand after months of austerity.”
The pandemic demonstrated how business could change in just a few months. Quarantined consumers “became more dependent on digital communications and more open to all kinds of digital commerce.”
The best advice is to start marketing early for the upcoming holidays. Because of rising inflation and supply line shortages, consumers will undoubtedly shop early and online beginning early in the 4th quarter—sooner for premium, hard-to-get goods.
Business owners need to stay in tune with the seasons and focus on keeping their business on track. Buying behaviors and business activity are keyed to known business trends, frequently on a quarterly basis. Those trends can be disrupted through game-changers like the COVID-19 pandemic, emptying workspaces, and quarantined workers at home work stations.
The good news is that the U.S. has bounced back better than most countries. Business owners can resume planning (almost) as usual, focusing on the first big event marking the end of winter—Memorial Day.
As students begin returning from summer break, expect another consumer spending spike in back-to-school supplies for both K-12 and college students. Also, businesses will have to reassign work previously done by interns, who will return to college campuses when the summer ends.
Finally, it’s never too early to plan for taking advantage of 4th quarter sales spurred on by holidays, family events, and pent-up purchasing.