On Thursday, CNBC’s Jim Cramer advised investors to accept that companies will most likely continue to struggle to plan for the future as they adapt to rapid and ever-evolving changes in the economy.
“In that kind of environment, you can’t really plan — you just have to guess,” the ‘Mad Money’ host said. “And 2022 will be known as the year many companies and portfolio managers got it wrong.”
A relentless host of headwinds, including persistent inflation, Federal Reserve interest rate hikes and surges in Covid cases have rattled the economy this year as businesses struggle to secure supplies and to provide consumers as costs and shortages hit them at every level.
At the same time, these companies have had to deal with changing consumer habits spurred by changing workplace standards and the reopening of economies.
Personal computer sales have fallen since the height of the pandemic as people return to the office, Cramer pointed out. At the same time, game companies have struggled to hold onto their pandemic gains as consumers spend less time indoors.
Consumers also cut discretionary spending in general as soaring inflation hit their pocketbooks hard this year, creating excess inventory at retailers such as Walmart and Target.
At the same time, even companies with in-demand products and services are experiencing headwinds. Automakers are struggling to fill orders for electric vehicles due to ongoing chip shortages and rising battery costs.
“We’ve never seen so many booms and busts happening almost simultaneously,” Cramer said.
On the consumer spending experiments side, airlines had to cut spending after taking on more than they could handle during the rebound in summer travel, leading to flight cancellations, delays and lost luggage.
“These changes are happening everywhere with miserable consequences. … No one knows what to do,” he said.