Last updated on March 22nd, 2022 at 04:41 pm
Three industry experts and an economist this morning shared their outlooks for 2022 at the annual BizTimes Milwaukee Economic Trends Event. Here are some key takeaways:
In presenting his annual macroeconomic forecast, former White House economist Michael Knetter, now president and chief executive officer of the University of Wisconsin Foundation, said he was cautiously optimistic in a few key areas.
“I think by summer (COVID-19) will have less economic impact. It may still be around, but I think we will decide to live with it. I think that will get us back to a normal recovery,” Knetter said.
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He believes the Federal Reserve will be able to thread the needle on tamping down inflation without harming economic recovery in 2022. Knetter said he expects GDP will grow at about 3.5% this year, unemployment will stay below 4% and core inflation will reach about 3.8% year-over-year by December.
“Inflation will be healing itself enough that the Fed won’t kill the recovery with its rate hikes,” Knetter said.
One thing Knetter said is here to stay, regardless of the state of the pandemic, is remote work as employees continue to place value on flexibility in the workplace.
“I think the market will naturally find this value of working from home and decide on an equilibrium,” Knetter said.
Staffing and workforce issues
Jonas Prising, chairman and chief executive officer of Milwaukee-based ManpowerGroup, acknowledged that the ongoing workforce shortage has taken longer than expected to correct itself and said things will not get easier for companies looking to hire new employees in an extremely tight labor market.
“Structurally, we have to get used to dealing with a much tighter talent pool than we’ve ever had to in the past,” Prising said. “The speed of technological evolution is outpacing our ability to get talent the right skillsets to take advantage of that.”
To address this, Prising said companies need to make an investment in reskilling and upskilling the workforce at scale to ensure we have a balanced participation among all individuals. Pulling in people who are structurally underrepresented in our workforce should also be a priority.
“We (in Wisconsin) are staring at this talent shortage at a record low unemployment rate, so this is not about to get easier in terms of our ability to generate supply in terms of workforce,” Prising said.
As for wages, Prising cautioned companies against making any drastic changes at the moment because some of the pressures caused by the pandemic are going to cause people to rejoin the workforce. This will begin to address the labor shortage. He said in the interim, it would be beneficial for companies to leverage other aspects of the job, such as employee benefits or flexibility.
Prising agreed with Knetter in that one of the lasting impacts of the pandemic is allowing employees more workplace flexibility than ever before.
“We want our apps and our functionality so bad we just scroll, scroll, scroll and hit the ‘I accept’ button… we don’t read anything and then we blame someone else,” Chang said. “We need to be smarter about how we protect ourselves.”
She said one of the easiest ways businesses can protect themselves this year is by making sure they are using multi-factor authentication, which can help prevent 49% of cybercrimes. The importance of continued employee training and awareness was also something she stressed.
Chang predicted that in 2022, technicians will play a larger role in companies than ever before as automation continues to be integrated into the workforce. She said the need to increase investments in STEM education is as great as ever, so there are people available to fill these roles.
Chang also predicted that identity and privacy innovation will continue to evolve this year.
“The idea of having a driver’s licenses will go away. How we see and the ability to detect your identity will absolutely be moved to biometrics,” Chang said. “Our whole notion of privacy and personal identity is changing, so what’s going to come with that are stricter ways to actually identify who you are.”
Among Chang’s other predictions are that there will be greater broadband access for all, and Artificial Intelligence will continue to make us more efficient, but will also dumb us down in some ways, as we don’t need to think quite as critically to complete tasks.
Sandi Siegel, president and managing partner at Milwaukee-based logistics services firm M.E. Dey & Co., said in terms of the backed up supply chain, things aren’t likely to get much better any time soon. She also believes there won’t be any relief as to the ongoing labor shortage for at least the first two quarters of the year.
“The average wage rate increase for truckers is 30 to 40% this year as they try to attract new workers, so that’s going to continue to keep rates up,” Siegel said, adding that for those considering how to move their goods, air carriers might actually have more competitive rates than in the past.
Siegel recommends that businesses add flexibility where they can. Changing receiving hours, examining how a product is packaged, and keeping a close eye on different ports around the U.S. and globe are ways to begin to address some logistical concerns. Severely escalated shipping rates, equipment shortages and additional destination fees are expected to continue this year.
“My best advice is throw out anything you knew in the past about pricing and RFQs (request for quotes) and everything else,” Siegel said. “Most people are saying don’t even bother with RFQs because they’re going to be outdated by the time you get the information back. It’s a really fluid situation.”