Economic Outlook for Chester County and U.S. in 2022: No Reason to Worry, Economy Is Adapting
“How are we doing in Chester County when it comes to the economy? Oh, baby, we’re doing terrific!” said Patti Brennan as she shared expert insights for 2022 at the Chester County Economic Development Council’s 18th Annual Economic Outlook.
Brennan, the President and CEO of Key Financial, was joined by James Glassman, Managing Director and Head Economist for Commercial Banking at J.P. Morgan Chase. Both were in person as the event was held at Penn State Great Valley for the first time last Friday to accommodate a socially distanced audience, along with those attending virtually.
Glassman began CCEDC’s must-attend event of the new year by taking a look at U.S. and global markets, noting a prevailing theme: “There is no reason to freak out. If you’re myopic, you’re missing the boat,” he said. “I came across a strange headline yesterday that we need to take a closer look at history during these unprecedented times. If these are unprecedented times, what does history have to do with it? Inflation, supply chain, workforce shortages — history doesn’t help us here but the numbers and facts do.” Glassman went on to make the following major points:
On inflation: “I’m not interested in this topic, and neither are bond investors. It’s only debated on the airwaves, not the markets. When I hear everybody freaking out about paying more for workers, benefits, and training and this is contributing to inflation … Look at the flip side: Labor pay is increasing but profit margins are also increasing at record levels — 10-13 percent with no reversion. This is not an inflation story. This is a productivity story, and it’s a great one.”
On the COVID surge: “Everyone not watching the economy assumes that every time there’s a surge, it hurts the economy. That was the case in the beginning during lockdowns, but it’s a different story now. Last year we had three waves of virus, and the economy grew five to six percent and recovered.”
On workforce shortages, higher business costs, and supply chain: “From my point of view — this is music to my ears. When you hear the challenges businesses are dealing with, this is just confirming that the economy is doing a pretty good job recovering. Two years ago, the big news was: Will I make it? Will I survive? These new challenges are happening because people are recovering quite briskly from the pandemic, and people are figuring it out.”
On China: “China used to be something you eat on. Now it’s something that’s eating you. Thanks to the internet, now everybody sees how a superpower like the U.S. lives, and they want to develop. This is good news for U.S. companies as we tap into it. The world is our marketplace.”
Long-term: “What we care about is whether there’s an issue here that’s going to force the Fed to not just take their foot off the gas, but step on the brakes like back in the 1980s. That is nowhere in the mindset. Fed policy is going to remain accommodative.”
Brennan weighed in on the local economy as well as personal investing.
On Pennsylvania & Chester County: “Pennsylvania overall is a great place to live and work. Pennsylvania’s growth at 2.2 percent and personal income growth of 2.8 percent is slightly better than the U.S. Chester County is the best place to live for job security and income based on unemployment rates and job earnings by industry. But there’s a caveat. It’s expensive to live here. Neighboring counties have the same issue, but we know we have to address it. And we know we really need to focus on accessible health care.”
“What a lot of people don’t realize is the number of innovators and new business owners who are here. And they pay really well. We are attracting more innovators and business owners with the Chester County Economic Development Council, and that can go a long way toward progress on our challenges.”
On workforce: “I hope that when we look back at this period, instead of calling it, ‘The great attrition’ we call it ‘the great attraction.’ We are creating a culture that people want to work in. People leave companies, not people. How do you make those people feel important? If you want to retain talent, make them feel important.
On consumer sentiment: “There is anxiety about the surge and what it means. It’s more expensive to do stuff — at the gas pump, home buying. But it’s temporary, and it’s how we’re handling it that’s impressive.”
On personal wealth: “No question that the top one percent is growing, but for the bottom 50 percent, growth increased by 74 percent. We have a long way to go, but that’s real progress. The people getting squeezed are in the middle class.”
On inflation & retirement planning: “Don’t be afraid of some inflation; just plan for it. And it’s really important to visit — not your retirement plans — but your plans for retirement. Because that has changed. And it is the best way to be resilient no matter what happens in the world around us.”
The CCEDC continues its 2022 programming with the 10th Annual Energy Briefing on Feb. 1, presented by CCEDC’s Smart Energy Initiative. More information is at www.ccedcpa.com.
“With new energy and infrastructure policy affecting more business sectors than ever, this is a must-attend event not only for property and municipal developers, facilities managers, and energy professionals — but for professionals across all industries,” said Gary Smith, CCEDC President and CEO.
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