Don Rissmiller, a partner at the brokerage and advisory firm Strategas, spoke during Thursday’s Rooster Booster about the state of the economy.
Rissmiller said he sees the labor supply as the biggest issue with the economy currently. He said in several industries, business owners working around these issues are interrupting the economy even further.
“There are plenty of other disruptions and people have done admirable jobs dealing with ports that are backed up and supply chains that don’t work and shipments that don’t come,” he said.
Rissmiller said the goal of macroeconomic policy is to get supply and demand in balance, but that there is an imbalance right now due to large shocks over the past 2 years. He said the pandemic put economists at a standstill waiting for the supply to catch back up with the demand needed.
“That didn’t happen,” Rissmiller said. “Preserving this gap has given us something we haven’t really had to talk about in about 40 years, which is inflation.”
He used the example of what the earthquake and tsunami did to the Japanese economy in 2011. According to him, there were disruptions in the auto supply chain but they were short-lived. The economy recovered eventually.
The same can be said for America in the future, Rissmiller said.
“Parts of this will start to look better over the next few months and they really already have. Used cars are one of the classic examples of the last 12 months,” Rissmiller said.
According to Rissmiller, the consumer price index is up 45% on cars this year alone.
He added that there is also an imbalance of supply and demand in the workforce, especially in the healthcare industry, leisure and hospitality industries, local government, and education.
That’s due in part to the number of people who have left the employment market for various reasons.
“We still have not recovered from this number. This could be people who chose retirement maybe a few years earlier than they might have; it could be … for health reasons; it can be disrupted by the lack of child care lack or completely available and fluid schooling,” Rissmiller said.
Ultimately, he said if the labor market is not cleared in a beneficial way, there will be pressure on wages. And as the restraints on inflation get looser, he said it’s going to be even more difficult to keep a 4% wage growth, even across the country.
