T.The Economic Outlook Breakfast at the Greater Norwalk Chamber of Commerce on February 16 was sponsored by Webster Bank and held at the Norwalk Inn.
The event’s keynote speaker was Jason Blum, Economic Research Advisor for Urban and Regional Studies at the Federal Reserve Bank of New York, who shared survey data collected from business owners within the bank’s jurisdiction.
“What we do in these surveys is ask some very simple questions,” said Bram. “For example, will things go up and down, what about job prices, etc. And one of the questions we ask is business activity.”
Bram noted that business owner sentiment has tended to be negative over the past six years, especially before and after the start of the pandemic and Russia’s invasion of Ukraine. Their opinions are ranked with 1 being the most positive feeling and 1 being negative being the opposite.
“Well, the good news is that both surveys reported an uptick in sentiment in February,” said Bram. “But it’s still below zero. So there are still more companies saying things look worse than they look better.”
“Knowing what people and businesses expect from inflation is very important because it influences their decision-making,” he added. “If you think prices are going up, or that you’re likely to pay more for wages or other inputs, it could actually be a self-fulfilling prophecy in the sense that it creates the conditions for this kind of inflation. Spiral.”
A rapid recovery in service industries, where employees earn less per hour, will offset net productivity gains in white-collar roles, which represent a smaller segment of the workforce.
“It’s not that these workers aren’t very hardworking,” Blum said. “They simply tend to have much lower productivity levels. When looking at earnings per job per hour worked, the leisure and hospitality sectors are much lower than the information and financial sectors.”
Bram also pointed to the pandemic as a catalyst for major shifts in housing trends and office use.
“I think the housing market has benefited from the pandemic in the long term,” Blum said. “If people were working from home 30% more time, he might not need 30% more space, but he would need a little more space.”
Blum says homes will remain a popular commodity in Fairfield County as those seeking the benefits of New York City turn to leasing while those seeking more space continue to be excluded from the city. .
“But while we hear about housing shortages, offices are the exact opposite,” says Bram. “Gradually more people are already working remotely and some are doing flextime. , I think it accelerated to about a month.”
Blum also predicts that the transition to remote work will eventually be “well over 8%” of all workers, with 16% looking somewhat likely. He points out that this means that about 80% of workers will not see any significant restructuring of their workplaces. in the long run.
Overall, Blum expected slow but steady improvement across much of the District 2 economy, though he warned of long-term challenges.
In the long run, however, guest speaker Tim Pierotti painted a tougher picture. Pierotti is Chief Investment Strategist at WealthVest, a financial services company with offices in New York City.
“There are things that are out of the Fed’s control,” Pierotti warned. “The recent decline in supply elasticity is likely to become more prevalent due to challenges such as demographics, deglobalization and climate change. It could trigger a shift to an environment characterized by volatile inflation.”
Pierotti stressed that this is to some extent the result of the end of a period of “great easing” in which many factors contributed to keeping inflation low. But he argues that the resulting geopolitical tensions, fueled by conflicts over energy resources, including both fossil fuels and raw materials, and underinvestment by mining companies fueled by high inflation, are creating a gap between supply and demand. I pointed out that it is likely that it is just expanding the .
“We have all enjoyed this disinflationary bull market of the last 40 years. We have learned to stick with knitting. My point is that you probably shouldn’t.” enterprise.