What will 2022 look like? Will the new year bring relief, or disaster?

If it feels like the United States, and the world itself in teetering between two extremes, that's because it is. What does the next year hold for America and the world? 

Highlights

By Marshall Connolly (NEWS CONSORTIUM)
9/23/2021 (3 years ago)

Published in Business & Economics

LOS ANGELES, CA (California Network) - Whether things are good or bad for you probably depends on whether or not you are working, housed and fed, and what the outlook is for your job and community. Across the nation, it's a mixed outlook. The financial and business sectors have done well, especially those who were able to capitalize on the COVID pandemic. Meanwhile, the hospitality sector, and especially the food service industry, were hit so hard, a double-digit percentage of establishments closed. 

Next year could see a renaissance in these industries, or it could see another disaster that makes 2020 feel like the good times. What happens next is up to tens of millions of individuals. 

The first and most obvious problem is the persistence of COVID. Assuming there are no new, especially contagious variants, and people continue to get vaccinated, or catch the illness and survive, the disease could burn itself out by spring. It would be over by now with more effective policies, including comprehensive vaccination programs, but that does not appear likely and never really was. How the vaccine was produced and the speed with which it was approved made many skeptical of its morality and safety. Of course, circumstances forced us to produce the vaccine in record time, but politics, a lack of effective messaging, and classic misinformation have botched the program. As a result, COVID will persist until next year and beyond. Then, there remains the danger of mutation. 

If COVID disappears, or at least fades into the background as nothing worse than the flu, then 2022 could bring a reemergence of the old economy that we enjoyed in early 2019. Of course, many favorites are gone forever, but a return to economic normalcy is always welcome. 

However, if COVID does not fade, or it mutates and outbreaks continue, if the vaccines do not hold off the disease, then the near-future may be rather bleak. Even strong businesses that have done all they can to survive will succumb to the constant pressure of crisis. 

What is most likely is a new normal, where COVID remains a background threat with periodic outbreaks and local restrictions that give rise to new ways of coping. COVID insurance and new kinds of business models are likely to emerge because we still have to live with this endemic disease. 

Of greater concern is the impact to retailers over the season to come. The 2021 shopping season is starting and already the warnings are out: buy now because the inventories are low, and there is no telling when popular items may be in stock. 

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Certain industries, such as the boardgaming industry, that relies on cheap imports from overseas, are being wiped out. The components they need to build their sets for each game cannot get passage on containers, at least not at prices that are profitable. And they're just one proverbial canary in the mine. We can do without boardgames. But how about other essentials? 

The price of shipping containers has skyrocketed from $3,000 to $25,000, making each container precious. To use and ship a container now costs much more. Even if retailers share containers to reduce costs, low-margin industries cannot afford the increase. 

Next, containers are sitting in ships off the coast of Los Angeles and elsewhere. There aren't enough workers to offload or move the containers, so merchandise is late to arrive. It's late September, but usually stores are already awash in decorations for the Halloween season. But not this year. Displays are smaller, items more expensive, and shelves will be bare much sooner. Warehouses and depots are overflowing with containers, waiting to be picked up and delivered. There aren't enough workers to move them all. 

That would be fine for most people if it were just decorations, but everything that is imported from overseas is suffering delays. Electronics are hard to find as well. And prices across the board are up. Shortages are expected to spread to more and more items and people can expect to see more barren shelves in places that are normally well-stocked. 

Right now, if people were to return to work in various industries, accepting only modest increases in wages, and COVID cases were to decline, we could expect a much better 2022. Retailers, who would otherwise lack inventory, will have something to sell and will survive the season. 

However, none of this is too likely. Workers remain content to stay at home rather than return to harsh conditions and low pay. Even workers in the business sector are quitting rather than returning to the office. This means pay will have to increase sharply to keep people working. And with businesses already feeling the pressure, this is the perfect storm that will force many to close. 

The most likely scenario is that the current issues with shipping, workers, and COVID will persist long enough to ruin many retailers the same way the hospitality industry was ruined. 

Before we blame the workers for this crisis, we must be fair and note that many retailers have kept wages flat and done little to improve working conditions despite enjoying record profits for a decade or more prior. In fact, that suppression of wages and conditions is what fed those profits to some degree. So, the current crisis is largely self-made and represents a form of poetic justice for some. 

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It is also due in part to our politics. After decades of globalization and outsourcing, and failing to build a safety net to support both businesses and workers during global crises, we now must pay the cost. A cost made much greater by resistance to measures that could have made the consequences of COVID much less, had they been wisely adopted sooner and adhered to with a wartime spirit of solidarity. Instead, everyone filtered science through their politics and responses were ad-hoc, patchwork, and half-measured. 

Since it is unlikely we will pull together in late 2021, we will all hang separately as economic chaos intensifies and nobody seems willing to sacrifice. Therefore, 2022 looks dismal from many perspectives except one: we have a choice. We've always had a choice, and if we change our ways and choose wisely, then we may enjoy a bright future instead of a bleak one. But that's a difficult order, even in the best of times.