FAIRMONT– At a Bureau 14 meeting Wednesday night, Ethan Hellier with the US Chamber of Commerce provided an update on the state of the economy, the political dynamics in Washington and what’s likely to come out of congress.
Bureau 14 is a gathering of members of the Fairmont Area Chamber of Commerce. It takes place on the the second Wednesday of the month at a different venue in town. Wednesday’s meeting was at The Ranch Restaurant.
Hellier started out by saying people may have heard that a mild recession might be coming. He said that experts say there’s about a 65 percent of a mild recession.
“However, according to our colleagues at the Chamber, the recent strength in spending and the strong labor market could boost this and we might see an even milder recession, or none at all,” Hellier said.
The topic of inflation was also touched on. Hellier said it peaked at a little over 9 percent but is now down to 6.4 percent. Something that plays into inflation is wage growth. While many people’s wages have grown, inflation is eating into it.
“While you’re seeing wages go up, there’s also more money coming out of your pocket,” Hellier said.
Several common costs were shared. Hellier said that electricity has seen a 12 percent increase year over year, gas is up about 1.5 percent and groceries are up 11.3 percent.
“And housing, which is the biggest driver, especially in this state, is up 7.9 percent. While that seems very high, housing on the national level is over 20 percent for a long period of time. Housing is a huge driver of our increased inflation,” Hellier said.
He said it’s likely that the scale will right itself and noted that the federal reserve wants to see inflation at 2 percent, and that some economists say that could be reached in 2024.
Switching gears, the workforce gap was also discussed. Hellier said there are 6 million people unemployed and a little over 11 million jobs open, which is a gap of 5.3 million jobs.
“Low unemployment is a plus, but it gets to the point that it’s so low businesses can’t find workers,” Hellier said.
He said the labor force is now larger than it was pre-Covid, but if it was at the rate of people working in February 2020, before Covid, there would be about 3 million more people working.
“There’s more people in the workforce, but with the labor rate, the number is still a lot lower. There’s a lot of people staying on the sidelines,” Hellier said.
It was asked why people are staying on the sidelines. Hellier said there are a number of reasons, childcare being one of them. He said that many more women began staying at home as families assessed their budgets and found out how to live on one salary. It’s also likely a lot of people who were close to retirement age retired earlier than expected.
Hellier said immigration also slowed during the height of the Covid-19 pandemic which could play into the shortage.
Moving to the current political dynamics, Helllier said from 1960 to 1998, seven of the 20 elections resulted in a change of house, senate or White House. Since 2000, 10 of the 12 have resulted in a change.
“Every president since Clinton has started their first term with unified control of congress. Now we’ve seen five cycles in a row that have produced a change and this is the first
time since 1962 since a democrat president gained senate seats,” Hellier said.
He said the big takeaway from this is that it’s easy to predict what’s going to happen in the coming election and that it’s important to have friends on both sides of the aisle.
The senate went from 50/50 to 51/49 with democrats gaining one seat in Pennsylvania. The house, on the other hand, has 222 seats to 213 seats with the GOP gaining 10 seats. On the state side, Hellier said that the democrats picked up four legislators across the country and two governor seats.
“Looking at the exit polls, I think conventional wisdom said inflation and crime would be in the top issues on the minds of the voters, which inflation was. The interesting thing is crime was third and the Roe vs. Wade outcome on abortion ended up coming in second,” Hellier said.
As for how people said they voted when it came to the issue of abortion, the change from 2020 to 2022 was the GOP went from 89 percent in 2020 to 19 percent in 2022. Nine percent of democrats in 2020 said the issue was important, which went up to 77 percent in 2022.
Hellier shared that the one thing that has to get done, as it has a deadline, is addressing the debt ceiling. He said while a lot of counties have gotten rid of their limit, the U.S. hit theirs on Jan. 19.
“The thing about the debt ceiling… we got close to hitting it in 2011. We got close enough to hitting it that the markets freaked out. The stock market went down, the dollar suffered,” Hellier said.
He said, according to the Department of Treasury, in the event that the debt limit were to lead to a default, it could have a catastrophic affect on not just the financial markets, but also on job creation, consumer spending and growth. Many private sector analysts believe it could lead to events of the magnitude of late 2008 or worse.
“They don’t take it lightly. It’s something we’re going to have to do. I think you’re going to see spending cuts on the table in order to get this done,” Hellier said.
Finally, he touched on a few other things that the Chamber is working on, which includes immigration reform by securing the border. Unfortunately it doesn’t have a deadline and as congress works on deadline, it could be awhile before it’s done.
Another thing being worked on is permitting reform, which has more bipartisan motivation to meet in the middle.
“We did a study that found that the average project took anywhere form four to seven years to go through the approval process, which is normally a lot longer than the average project itself takes,” Hellier said.