Members of the Birmingham Bloomfield Chamber of Commerce gathered for the annual Economic Forecast Breakfast on February 16.
BLOOMFIELD HILLS — Given all the strain on businesses from the pandemic, Americas Commercial Transportation Research Co. chief economist Paul Traub said the economy is still performing fairly well.
“American workers and American business leaders are very adaptable, and we were able to adapt pretty quickly to all of these conditions,” Traub said.
Traub returned to the annual economic forecast breakfast hosted by the Birmingham-Bloomfield Chamber of Commerce on Feb. 16 at the Iroquois Club to talk about the national economy.
In addition to discussing US gross domestic product and business trends, Traub focused on consumer activity in terms of buying ability, willingness and habits.
In the last quarter of 2021, the economy grew by 6.9%, which was better than most forecasts, including Traub’s forecast of around 4%. Economists had predicted a smaller increase in the fourth quarter due to the conditions the country was facing with the omicron variant of the COVID-19 virus.
The Modern American Consumer
Traub assessed consumer willingness and ability using red green, red, and yellow light indicators to classify when things appear to be good, bad, or in a transitional phase. Consumer will refers to attitudes, while consumer capabilities refer to income and credit.
Due to inflation and declining consumer confidence, he concluded that overall consumer ability and willingness are both in the yellow range.
One of Traub’s theories about the cause of recent inflation has to do with stimulus checks, “too much money for too few goods.”
Traub acknowledged the importance of stimulus checks for some households, but he said the checks were broad in scope and were given to people like him who didn’t miss a day of work due to the pandemic. He said the excess money from stimulus checks as well as disruptions to supply chains could have contributed to inflation.
Personal consumption trends vary depending on how people use their money. Both durable and non-durable goods are above the expected trend line that was set before the pandemic, but services have fallen well below the trend line.
“We went from buying services, going to restaurants, doing other things to buying goods,” Traub said.
Domestic business conditions and activity were also assessed using red light indicators. On the Traub scale, the composite of economic conditions is corporate earnings yellow, and corporate debt and risk premia are green, but producer prices are red. Business activity is green at all levels, including industrial production, new orders and capacity utilization.
The Impact of COVID on Local Small Businesses
Oakland County Director of Economic Development Ingrid Tighe followed Traub’s presentation with an update on the local economy.
Tighe reported on how the county distributed funds from the Coronavirus Aid, Relief, and Economic Security Act and other aid. Small businesses received $90.3 million in support through programs such as grants, manufacturing support, personal protective equipment kits and other programs.
To demonstrate the tone of local small business, Tighe reported the results of the Small Business Pulse Survey.
The survey showed that 23.8% of small businesses in the Detroit metro area experienced a significant negative effect from COVID-19. The survey also revealed that 43.7% of local small businesses have difficulty hiring employees. To prove the point, Tighe asked anyone in attendance from a company that was struggling to hire employees to raise their hands. The number of hands raised matched national and local data.
Representatives from the companies responded to a prompt asking how long they thought it would take before things got back to normal. Most companies said they believe it will take at least six months before pre-pandemic standards return. However, Tighe predicts that he will never be exactly the same again.
Tighe said one of the main issues for businesses is access to capital.
“So we leaned in, we (the county) created and just created and launched last month a revolving loan fund to address this issue. The program primarily focuses on veteran-owned businesses, small businesses, women-owned businesses and minority-owned businesses, to help them access capital they might not otherwise have. right,” Tighe said.
Before Tighe’s presentation ended, she shared the various initiatives the county has implemented to address labor issues. These include a program that trains and educates residents called Oakland 80; the Going Pro Talent Fund, which trains tenured workers; apprenticeship programs; and the Robotics Technician Training Program. They also work closely with school districts to address labor issues, she said.