Investors are now hoping for glad tidings as the major consumer companies report their fourth-quarter results and provide forecasts for 2023. But one of the first groups out of the block, Procter & Gamble , was quick to throw cold water on the idea of an easy recovery.
He is right to be cautious. Much as everyone would like to close the door on the disruptions from the pandemic and Russia’s invasion of Ukraine, it is too soon to declare a return to normal. Meanwhile, demand is fragile. American consumer confidence is rising, but remains sharply below pre-pandemic levels, and the last retail sales numbers were disappointing. Rising interest rates and higher energy prices mean many western consumers have less money for discretionary spending. The reopening of China’s economy also holds promise, but the impact is as yet unclear, and retail sales fell year on year in November and December.
That’s because new home construction is down sharply in both the US and the UK, and the US government mortgage organisation Fannie Mae is forecasting US home sales will fall 21.3 per cent year on year in 2023 to their lowest level since 2010. Without new nests to feather, consumers will need fewer new durables, and those that might consider upgrading may be deterred by falling home prices and squeezed budgets.