Financial experts provide outlook for the U.S., local economies
Surging COVID cases, rising inflation, supply chain issues, Hurricane Ida, the “Great Resignation.” Each of these has had an impact on the nation’s economy and the bottom line of businesses and households across the region.
To bring some clarity on the issues, the Chester County Economic Development council hosted its 18th annual Economic Outlook on Friday, Jan. 14, titled “Back to the Future.” The event featured presentations from returning speakers James Glassman, managing director and head economist for Commercial Banking at JP Morgan Chase; and Patti Brennan, president and CEO at Key Financial Inc.
Glassman kicked off the program, and wasted no time in offering his assessment.
“Long story short — the outlook is good. And for your community here (Chester County) — that means good also,” he said.
Glassman said he had heard a headline recently that said these are unprecedented times and we “need to spend more time understanding our history.”
“My problem is — if these are unprecedented times, why does history have anything to say about what’s going on right now,” he said. “And I think that’s a real problem when it comes to
understanding the inflation dynamic. If there is no history comparable, our models won’t see it.”
On the subject of inflation, Glassman said the topic dominates the nation’s conversation about the economy.
“I have to tell you, I’m just not interested in this topic. And neither are bond investors,” he said, adding that the inflation conversation “is not echoed in the markets, where people put money to work in terms of what they think about the future.”
Glassman said we have all gotten used to linking COVID with the economy, and he thinks “we’re having a hard time getting a grip on how to refocus today.”
He pointed to the impact of the lockdowns of early 2020, that “wreaked havoc” on many businesses.
“Because of that, people are not watching the economic
data and assume every time there is a virus flare up, then it must mean new trouble for the economy,” he said.
He added that people hear the news about the virus and wonder how business leaders are optimistic.
“Last year we had three waves of virus, and the economy grew 5-6% and recovered,” he said.
Glassman said hearing about workforce shortages, higher business costs and supply chain issues “is music to my ears.”
“When you hear the challenges businesses are dealing with, this is just confirming that the economy is doing a pretty good job recovering. Two years ago, the big news was: Will I make it? Will I survive? These new challenges are happening because people are recovering quite briskly from the pandemic, and people are figuring it out.”
In transitioning to Brennan’s talk, Glassman said the legacy of the pandemic is going to be what it is doing to make businesses figure out how to get more efficient.
“This is the story of our time,” he said, adding that innovation has increased dramatically in the past couple of decades, but it hasn’t been showing up in productivity trends, because business had been “doing things the same way.”
“But a crisis to survive — forces you to take advantage of innovation. That is when you see productivity surges. We are in one of those times now,” he said. “It’s giving us more options and we are getting familiar with it.”
Brennan said adaptation is the theme of the economy — for businesses and individuals.
“The Federal debt is up, but what is interesting, the
deficit has declined. That is a good sign. Unemployment has come back down and things seems to be moving from an economic perspective,” she said.
Brennan said the value of homes are up, wages are up and there are job openings.
“We hear about the number of people that are quitting their jobs. People are always quitting their jobs,” she said.
At the same time, others are starting businesses — at record levels, she said, adding “that is something to be optimistic about.”
“I hope that when we look back at this period, instead of calling it, ‘the great attrition’ we call it ‘the great attraction,’” she said. “We are creating a culture that people want to work in. People leave companies, not people. How do you make those people feel important? If you want to retain talent, make them feel important.”
About Chester County’s economy, Brennan said the county is “the best place to live for job security and income based on unemployment rates and job earnings by industry.”
“But there’s a caveat. It’s expensive to live here,” she said, acknowledging that neighboring counties face the same issue, “but we know we have to address it.”
She added that Chester County is attracting more innovators and business owners, which can go a long way “toward progress on our challenges.”
Brennan added that while it is more expensive to do things like buy gas or a home, “it’s temporary, and it’s how we’re handling it that’s impressive.”
When it comes to personal financial planning, Brennan urged the audience to plan for some inflation, but not to be afraid of it.
“It’s really important to visit — not your retirement plans — but your plans for retirement. Because that has changed. And it is the best way to be resilient no matter what happens in the world around us,” she said.
The economic development council had planned for an in-person event Jan. 14, moving the program to Penn State Great Valley and limiting the number of tickets available. However, a virtual option was added, in recognition of the continuing pandemic and recent surge in cases. About 150 registered to attend, either in-person or virtually.