Despite a lingering global pandemic and rising inflation worries, the U.S. economic outlook is brighter than it’s been since the Great Recession of 2008-2009, Kevin Depew, chief economist for RSM, told Quad Cities business and community leaders Wednesday.
Even though the ingredients are in place to create the greatest growth since the Industrial Revolution, many find such a sunny assessment hard to believe, he told a crowd of more than 300 people attending the 2022 Quad Cities Chamber Economic Forecast in person at the Waterfront Convention Center, Bettendorf, and virtually. Turning those attitudes around will be critical to the recovery he anticipates.
“In the longer term we are in very sound shape,” Mr. Depew said. “We just have to deal with some very challenging times right now, and I think we will.”
Those challenges begin with “a pandemic that is influencing the way we think about ourselves,” he said. It is not hard to see why. The COVID-19 virus already has taken the lives of 1 million people in the U.S. alone. The virus is helping fuel a labor shortage plaguing business and the nation, Mr. Depew said. Women were disproportionately impacted by the pandemic as they were forced to quit their jobs or reduce their hours to deal with such things as child care and elder care issues that were worsened by the pandemic.
Alarms also are being raised daily about rising inflation and the global supply chain crisis dominates the headlines and tops most newscasts, he said. But, Mr. Depew said those issues are obscuring some key economic factors that would fuel the economic turnaround he is forecasting.
It begins with the end of the pandemic as we have known it. While COVID-19 isn’t likely to go away completely, he said, we will learn to live with it as we already do with the common cold or seasonal flu. It will no longer consume our daily choices, which in turn should help reduce the polarization that is holding America back, politically and personally.
In addition to a sunnier outlook, continued improvement in supply chain challenges, falling unemployment, rising personal income and some of the largest gains in decades in household income and savings will be key to the economic turnaround Mr. Depew predicts.
Consider that, at the same time as American businesses are reporting some of their greatest profit margins since the 1950s, workers are getting a larger share in those gains. “We are stealing workers from one another and we’re paying them more to come to our side,” he said. That has forced employers to raise their wages to both keep and attract qualified workers.
When Americans begin to spend the “savings surplus” they have been sitting on and businesses begin to invest their increasing profits in major job-creating projects it also will impact economic growth, Mr. Depew predicts.
That kind of capital investment by businesses hasn’t happened in at least a decade, he said. “We just didn’t do it.” When businesses were not supporting the economy, he said, it was up to a weakened household sector to make up for the loss.
Major public works projects and infrastructure projects also are, and will continue, boosting the economy significantly, he said. At the same time, the U.S. is seeing increasing returns from a technological revolution that we’ve been hearing about for decades. The work that’s been done on such things as automated transportation will continue to contribute to growing our economy, he predicts.
Mr. Depew also believes that technology is reducing the rural vs. urban divide in America because it allows Americans to live and work anywhere they choose. Technology also is helping to lower health care costs as it allows people in rural communities to get quality health care that was traditionally available only to those in major metropolitan areas, he said.
The year ahead is not without its challenges and concerns, Mr. Depew said. The Federal Reserve, for example, “needs to be accommodating” as it works to ensure that the economic recovery is sustainable. Individuals and businesses also will need to invest in the economy.
And importantly, America will need to focus “on creating an economy that trains people for the jobs that are available 10 to 20 years from now.”