On June 1, Matthews, Carter & Boyce once again welcomed economist Dr. Terry Clower to speak on the topic of the state of the economy, with the highly-anticipated mid-year economic update.
In his signature engaging and entertaining fashion, Dr. Clower shared the economic news of the day and invited questions and commentary from those who tuned in. Beginning with a national overview, his analysis of the U.S. Gross Domestic Product was that the news is not all bad, as he summarized: “the economy is still growing at this stage.”
With respect to the labor market, Dr. Clower commented that it’s stronger than most expected. “Between March and April we still as a nation added over a quarter of a million jobs – that is an extraordinary level of resilience in the job market,” he stated. The unemployment rate is still low and he pointed to a small uptick in women re-entering the job market. “It is good news to see that happening,” he added.
Currently there are 1.6 job openings for every unemployed person in this country; employers are still having trouble finding the personnel they need.
With respect to inflation, it’s moving in the right direction; it’s not as bad as it was several months ago. Monthly consumer prices are starting to come down, including food prices.
With respect to home sales, he said “we like our houses, we love our mortgages,” — pointing to his own mortgage rate of less than 3% as an example. Because of this, inventory of existing homes for sale is likely to stay depressed.
Before wrapping up the state of the national economy conversation he also spoke about the debt ceiling – saying that while the deal is getting done, politicians are using it to “get attention and create drama” as politicians are prone to do.
Finally, with respect to the recession he sees it happening perhaps late in the year, though the odds of it being a “shallow and short” recession are improving – riding that wave of the strength of the labor market.
With respect to the local economy, signs point to recovery – and going past the point of recovery from the pandemic. However, there is still volatility with declining levels in the DC area economic indices, which may be an indicator of a future downturn in the region.
In discussing the job market, Dr. Clower shared a staggering statistic with respect to the regional labor picture: 30% of the federal workforce is currently retirement eligible – and the federal government is also having a very difficult time finding workers. He spoke at length about the DC area losing our competitive edge — “we’re losing pace,” he cautioned. “We are losing people to other states,” he said, recalling the phrase, “People are actually voting with their feet.” This describes the trend of people in key large jurisdictions taking a stand by picking up and moving elsewhere.
With respect to work from home, we are getting to the point where 2-3 days a week in office is becoming the market norm, with some exceptions. Even the federal government is making a 2-3 days a week in office schedule accessible – as agencies are having trouble attracting local workers. They are hearing: “I’ll take the job but I’m not coming to the DC area for this job.”
Dr. Clower also cautioned that navigating this new hybrid landscape is the responsibility of management – not the responsibility of the worker. Leadership is going to have to step up in this regard.
Also a key concern for our region is the continuing problems the metro system is experiencing, and how that contributes to challenges in attracting a young work force that depends on public transportation.
These highlights merely scratch the surface of the information and insights shared by Dr. Clower with our audience. If you missed it, you may view the entire presentation here.
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