Tag: #inflation

economic development

WHAT’S NEXT? WHO KNOWS?

Barbara J Alder

Let’s review. I said I would wrap up 2021 with my views on what I thought would continue post-pandemic, what would come to an end and what I put in the category of “who knows?” all with the caveat of my lack of technical expertise in economics, healthcare and epidemiology. However, with 40+ years in business and higher education and a propensity for keen observation, I do have the ability to find connections that others might miss. So for what it’s worth, here goes.

A brief rundown of the “what will continue” category included:

  • COVID, perhaps not as virulent, and those who resist the ways to fight it
  • Shortage/burnout of healthcare workers
  • Talent shortages in many sectors, but opportunities for those who seek them out
  • Real estate challenges in both commercial and residential markets
  • Retail, both brick-and-mortar and ecommerce, and supply chain challenges (both retail and wholesale)
  • Inflation, no longer considered transitory by those in policy making roles

What will change or fade away included:

  • New ways to fight COVID, perhaps both treatments and vaccinations
  • More travel if the increasing cost of fuel and flight cancellations don’t combine to bring travel to a screeching halt; travel and hospitality industry recovery
  • People returning to concerts, restaurants and other forms of entertainment (provided that people to fill the necessary jobs can be found)
  • Virtual learning will become a thing to replace snow days on a short term basis rather than something put in place for long term during COVID outbreaks
  • Mask use will eventually fade away or become a personal choice
  • Interest rates, held at historic lows since early 2020, will rise during 2022

WHO KNOWS?

Now that we are a week or so into the new year, so many things could go into this category. The talking heads in the business and finance world have been fascinated with inflation at high levels, so-called “quits” at high levels as well along with continued job vacancies and employers struggling to fill them. That struggle may be one of the factors contributing to the inability of the economy to fully recover in a robust way throughout the coming year and beyond—who knows?

There are a few items that I tend to watch on the Bloomberg tracker at the bottom of the screen. Most of these I have no direct investment in—just curiosity and some knowledge of how their movement may affect the broader economy in both near and short term.

First, I watch the three main domestic stock indices, even though I know their movements don’t signify either how the broader economy may be doing or how a broader portfolio may do. Movements in the Dow, S&P and NASDAQ were quite positive in 2021, but got off to a somewhat rocky start in the first week of 2022. One week doesn’t necessarily set a trend, and so many factors will weigh in on the performance for the remainder of the year, so again—who knows?

The price of oil as a commodity is one I watch, not because I am invested there but because it will eventually be reflected in the price at the pump and other transportation costs. It recently topped $80/barrel and I recently heard some discussion of $100/barrel within the next year or two. At the risk of dating myself, I remember J.R Ewing, the evil brother on the nighttime soap Dallas, exulting when oil topped $30/barrel. Where will the price of oil, and its products go, how will that affect the rollout of non-internal combustion engine vehicles (EV and hybrid)—again, who knows?

Cyber currencies, Bitcoin et al, are fun to watch but not a sector I have come to understand. When they first appeared on the Bloomberg tracker running at the bottom of the screen, I knew they were at least approaching mainstream. Prior to their appearance, there had been a lot of discussion about regulation (quite the move from Bitcoin being a haven for drug dealers and organized crime). If memory serves, Bitcoin topped out around $65k and is now trading around $42k at this writing. A bit speculative and scary for me. A few years ago a friend said he was investing in Ethereum, a lesser known cyber currency. He bought in at $1000 and said he only invested what he knew he could afford to lose—just to see what would happen. I don’t know if he stayed the course, but it is trading quite a bit higher than that now. Even some of the larger banks and investment firms are now talking about these currencies, making trades, offering ETFs and so on. So will cyber currency continue its move toward mainstream—who knows?

We could go on in this vein for pages, but let’s stop here. We will revisit the list perhaps midyear and again at the end of the year and see what has developed.

FOR NEXT TIME:

I will be thinking about what the next round of posts might address. If you have any ideas or requests, don’t hesitate to let me know.

IN CLOSING:

Stay safe, healthy and happy until next time. Looking forward to your comments and connections.

economic development

WHAT’S NEXT?

Barbara J Alder

After almost two years of an unprecedented (just one of many terms I’m tired of) pandemic, quarantine, long-awaited vaccines that some people avoid because they don’t believe the science or believe some strange conspiracy theory, what can possibly be on the horizon for 2022? I have no crystal ball, I’m not an epidemiologist or even a healthcare worker. Nor am I an economist. But I do have 40+ years of work experience in both a large corporate environment and higher education on top of two business degrees. Add to that a propensity for being quite observant, good at connecting dots and noticing things others may never notice.

With those things in mind, here are my observations wrapping up 2021 and looking ahead to 2022. As I have observed before, I like to do things in threes, So we will look at trends I think will continue, things I think will fade away, and then will wrap up with “who knows?” To be completely honest, after the last two years, everything should probably go in that last category. Earlier this week while meeting with an acquaintance, I gave him some free advice and made sure he knew that it was worth exactly what he was paying for it—zilch, nada, zero! Same goes here, although this info isn’t exactly advice. More a compendium of info that has been rolling around in my head after reading, listening, and synthesizing what I know, what I think I know and what I wish we knew.

So here goes—

WHAT WILL CONTINUE:

COVID in its various forms will be with us for the long haul. Some things I have read say it may become less virulent, and we may be able to protect ourselves with an annual booster. Perhaps it can be combined with our annual flu shot. For those who opt out, for whatever reason, this resistance is another thing that will continue. The misinformation (my view) that will continue to drive this challenge won’t go away any time soon either. Illness and death, unfortunately, along with overburdened hospitals and their staffs will continue. How long I don’t want to guess.

The outgrowth of this will be healthcare workers experiencing burnout, leaving the profession, and perhaps not being replaced by new hires who are turned away from these professions by the challenges of the past two years. Further exacerbating the issue in our hospitals will be putting off non-emergency care, those of us afraid to seek care when we need it, and delaying the inevitable. In Indiana, our governor has again called on military troops to supplement overburdened staff in hospitals around the state. Typically called out in times of emergency like floods or tornadoes, this is something I have not seen before.

On a broader employment basis, the need for talent to fill the many vacant positions will continue into the foreseeable future. The Great Resignation, now called the Great Reset by some, is not abating. Many of those leaving their jobs haven’t found a replacement position yet, but as savings dry up and those federal dollars come to an end, they MAY be encouraged to find something else. I even saw a short blurb about people in central Indiana now going back to the same jobs they left voluntarily earlier in the pandemic. No details, but I may be curious enough to do a bit of research. Others are leaving for greener (literally) pastures as some employers are coming to realize that higher wages, better benefits and so on are required to both retain and attract the best talent.

On the real estate front, the changes in both the residential and commercial markets will continue for some time. On the commercial side, few employers will be going all-in on a return to office for all employees any time soon unless necessary for the type of work they do. Hybrid and remote work will continue, perhaps on a permanent basis for some employers and employee groups. This flexibility ranks highly in terms of what people look for when searching for positions. In terms of residential, the increasingly high cost of lumber and other building supplies will continue to drive up the cost of new home construction as well as moderate and major renovations of existing homes. Factor in the challenge of finding skilled labor (have you tried to get work done at your house lately?) and you can just about forget moving. Even if you sell in a sellers’ market, where will you buy and what can you afford?

Closely tied to commercial real estate is its subset, retail. The pandemic and the shutdown in the early days and months forged some quick winners and losers. For example, Zoom and Instacart had niche markets; now they are household names. Amazon was already a household name, but ecommerce and other delivery services like GrubHub and DoorDash gained greater prominence. The hybrid version, order online and pickup in store or curbside, grew as consumers began to get out more. Different people will continue to have different preferences, and the companies that get ahead of those preferences will prevail. Brick-and-mortar will survive to the extent that it provides a unique experience combined with ecommerce, social media, and all the other consumer preferences. The days of “this is what we have, take it or leave it” are long gone.

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Inflation, no longer considered transitory (really just a fancy word for temporary) by the people setting policy, will be around long enough to present a challenge. Continued supply chain challenges will exacerbate this issue, and it won’t be just TP in short supply. Anecdotally, in my circle it has been cream cheese, of all things, that some have been unable to locate. Not me, I stocked up for my Christmas recipe needs and for my morning bagel.

FOR NEXT TIME:

This turned into a longer list of observations than I expected. The remaining two categories—WHAT WILL FADE AWAY and WHO KNOWS? will have to wait for another day. Until then, have a safe, healthy and Happy Holiday Season. Take time to celebrate with those you love. Refresh and come back ready for a new 2022!