With a virtual audience of almost 200 registered, MCB’s annual economic outlook with Dr. Terry Clower once again proved to be an educational, insightful and thought-provoking afternoon.
Dr. Clower began his presentation covering national economic trends, commenting that though the effects of the pandemic caused a technical recession, it was short lived. We are now in a period of robust growth, but are still 3.5 million jobs short of where we were two years ago, in February of 2020. Even though the economy is growing, there is displacement, in part due to the “great resignation”, where the inability to find workers is having a “dragging effect’ on growth.
Dr. Clower also spoke expansively about the fact that the “structure of our employment has changed forever.” Conversations about employment trends must include examining remote work. Remote work is being used to deal with talent and availability issues and to address work/life balance. However, he cautioned, people who are working remotely are reporting feeling more overworked. He also talked about how AI will be replacing certain tasks (ie law firms using AI to draft legal briefs) and cautioned that we have to have “intentional progress” of training or we will be headed for a massive labor disruption.
Also related to employment, Dr. Clower addressed childcare concerns as a “national economic issue.” He called on employers and state and local governments, as well as community leaders, to take on this challenge and come up with creative, practical solutions for families.
With respect to consumer confidence, high levels are driving spending and investment and there is still demand for luxury items. Regarding housing, drop in inventory is still an issue and he sees mortgage rates climbing to 3.6 later in the year. New homes will need to be built in order to keep up with population growth as more people are aging in place. Unfortunately, new home construction is being hampered with supply chain constraints, which is also impacting demand.
Dr. Clower then moved to trends here in the Washington, DC metro area. In our region, the economy is growing, but not as robustly, due in large part to labor market shortages.
Northern Virginia fares the best in terms of the lowest rates of unemployment. He spoke in general about the challenge of bringing new employees here – something the entire region is grappling with. Another interesting trend in the DMV is the rate of office vacancy is not going down as much as in other regions – companies are still in a “wait and see” mode before making big decisions about downsizing space.
He also spoke of the importance of affordable/workforce housing and making this a priority here in our region. In the District, Mayor Muriel Bowser proposed a $20 million Workforce Housing Fund to help subsidize housing for “teachers, police officers, janitors, and social workers,” typical middle-income occupations.
Another very interesting trend is in the nonprofit sector. With an influx of money becoming available from the federal government and state governments, nonprofits will require more help in finding appropriate government funding and understanding the rules associated with the funds – this is an area of opportunity for consultants and other professional services firms.
Dr. Clower mentioned the “TikTok” generation – Gen Z – and the emphasis on soft skills as opposed to technical skills for these young, aspiring job seekers. There is a lot of opportunity for this generation and he joked that boomers, “need to just get out of the way.”
In closing, Dr. Clower reinforced the fact that hybrid is the new workforce norm and “we will need to come up with more effective solutions to manage and supervise hybrid work.”
For a copy of Dr. Clower’s entire presentation, contact [email protected]. For more information on future events, stay in touch with MCB! Follow us on our social channels, subscribe to our newsletter and sign up for our blog here.