State of the Economy keynote features discussion on workforce availability, supply chain issues

At the Chamber's recent State of the Economy event, keynote speaker Dr. Bill Conerly brought his ability to connect the dots between the economy and business decision to the unique circumstances facing Oklahoma City businesses today. Read on for an excerpt of his thoughts on workforce availability, supply chain issues, and more. 

What one economic statistic should business leaders pay attention to in 2022?

Conerly: It’s not really an economic statistic; it’s COVID. I’m not an epidemiologist, but my assumption is that things will be better with respect to COVID—not over, but better. We have more people vaccinated and more natural immunity. We have treatments being approved. I think it will be better, but I would not be surprised to see another spike.

COVID has impacted every aspect of our economy, including consumer behavior. What are we seeing on that front?

It's not unusual for income to go down in a recession, but during the early days of the pandemic, income went up and spending went down. It was the reverse of what we expected, and consumer behavior continues to be impacted by that. A lot of people kept their jobs during the pandemic, and those who didn’t, got unemployment assistance at a very high rate of return. People also received multiple stimulus checks. At the same time, people cut spending because they were worried about their jobs or weren’t able to spend money by eating out or traveling. The extra funds were either saved in bank accounts or used to pay down credit card statements, so consumers are entering 2022 in great shape. As long as people are able to go out and do some traveling, some dining out, some concerts, there will be a lot more spending in 2022 because consumers have the money and the pent-up demand—that’s the most important part.

What about other sectors of the economy?

A lot of state and local governments like Oklahoma have increased tax revenue, plus they all received federal stimulus money. There's going to be a lot of government spending. Other sectors that will experience more moderate growth include non-residential construction, business equipment and residential construction, but because of pandemic-related delays, these industries have long lead times and backorders of equipment.

Exports will be the weakest sector of the economy. It won’t be a negative environment for exports, but it won’t be as much growth as we have seen elsewhere.

What can you tell us about why the United States is experiencing so many supply chain issues?

There are a couple of factors driving this. One is that we are buying a lot of stuff. If you look at imports for the United States, we are importing more stuff into the country than we were in 2019. Our ports are working, but we are experiencing reduced capacity, especially in trucking employment. There’s a lesson to be learned here, even if you don’t operate a trucking business. I think the cultural change brought on by COVID has made it less likely for people to give up time with family and friends in exchange for work, and that’s something that truck drivers have to sacrifice in order to do their job. The pandemic led many people to think about what is most important in life.

How does the labor issue play into all of this?

It’s not like we’ve got a supply issue and a labor issue. The labor issue is more than half of the supply chain problem. Usually, there are more unemployed people than open positions, but that is not the case right now. Many people who were working before the pandemic are not working now. Some people went into early retirement, some were impacted by child care issues, and I think the stimulus and the unemployment insurance had a big role in people leaving the workforce. As the stimulus gets farther behind us and schools are more reliably open, I think we will see a gradual improvement in the labor force and the supply chain.

With these factors impacting local businesses, what is your recommendation for how to move forward and grow your business in uncertain times?

I've talked to several companies about what they're doing, and what I've learned is that what worked six months ago may not be what is working now. I would suggest any of you who are critically dependent on materials go through a brainstorming session and think about how much inventory you carry, product redesign, local sourcing—go through the whole list of options and create a game plan for multiple scenarios.

On the employment side, the challenge we're having now is a short-term emphasis on a decade-long issue. The decade-long issue is baby boomers leaving their working-age years. The generation taking their place is no larger and foreign immigration into the U.S. is way, way down. There will be virtually no growth of the working-age population through 2030 in the United States so I heartily recommend that you prioritize employee retention and recruiting in your decisions for 2022.

Special thanks to Presenting Sponsor Arvest Bank for supporting the State of the Economy event. For more information on upcoming Chamber events, visit okcchamber.com/events.