by Erik Ault
The Economics Insight Summit, hosted by Baldwin Wallace University on January 25th, focused on economic trends on the global, national, and regional levels.
Held at Baldwin Wallace University’s Center for Innovation & Growth building in Berea, this annual summit was moderated by Dr. Susan Kuznik, the Dean of the Carmel Boyer School of Business at Baldwin Wallace University.
Featured panelists were Michael Weidokal, the Executive-in-Residence at Baldwin Wallace; Kevin Jacques, the Chair of Finance, Economics and Analytics Department at Baldwin Wallace; and William (Bill) Koehler, CEO of Team NEO. This was the first in person summit at Baldwin Wallace in three years.
“I’m really glad that we’re all here in person. This really means a lot that we can get back in a room together, and to share among all of ourselves this rich information that we’re about to experience tonight,” Dr. Kuznik said, opening the summit.
First to speak was Michael Weidokal, founder of International Strategic Analysis. He spoke on headwinds facing the global economy. “I wish I had better things to talk about…quite frankly, this is going to be a difficult year for the global economy,” he warned.
He said that the economy is still being affected by the Covid-19 pandemic. He also mentioned that the war in Ukraine has affected commodity prices. He highlighted the tensions not only between China and the United States but also the tensions within the country. There are labor shortages and high rates of inflation all over the world, including in Japan which faced deflation for many years. This high inflation will cause central banks to raise interest rates. This will pose a risk to those with high rates of debt since they will be paying more to finance the debt.
“I’m not getting too depressing yet, am I?” he joked. “I have some positive news toward the end, I promise.”
He pointed out that many regions are likely to fall into recession, such as Europe and emerging countries. However, Asia will be a center of growth. “It’s really going to be Asia’s decision on how fast we grow this year, or if we grow this year,” he declared.
Because of the many insecurities facing the economy, businesses and consumers are looking for more favorable economic locations. This will require places to become competitive against other localities, such as in areas like infrastructure, quality of living, and taxation policy.
Businesses will also have to be competitive and focus on retaining talent. Individuals will need to have marketable skills and be well informed in order to increase their productivity.
“Productivity is really going to hold the key in how well we can grow. Productivity, and how well we can deal with the environmental challenges in the future, are really going to determine how we succeed as a national society, a local society, and in businesses,” he predicted.
Next to speak was Dr. Kevin Jacques, who worked at the Treasury Department for 14 years before coming to Baldwin Wallace. He spoke on economic trends on the national level. “When an economy like the US economy goes through some kind of really significant shock, it takes a considerable amount of time for the economic and financial structure of that economy to recalibrate itself,” he cautioned. “The world we see today is still playing out the aftermath of the pandemic.”
He predicted that zero percent interest rates are gone, and that deflation will not be a problem within the near future. He pointed out that even though the unemployment rate is low, there are other factors contributing to that besides a strong job market, so it is not necessarily good news. He underscored that the interest rate is likely to increase in order to combat inflation, but the inflation rate will not come down quickly. According to Dr. Jacques, depending on how high the central bank raises the interest rate will determine whether the US enters a recession. He is not convinced that a recession is inevitable.
“Here’s the part of me that says we may not have a recession…savings in the economy are currently at the same level that they were prior to the pandemic. Translation: People have money in their pockets,” he said. Dr. Jacques said that this extra cash may help to maintain demand in the economy, even if there are job losses. Rising interest rates might chip away at corporate profitability, which is associated with a recession. If this happens, it would be a good time to invest in the stock market.
But there is another danger that keeps him up at night: the threat of financial default from Washington. “If they default, you are going to see the next financial crisis in the world,” he warned.
The third expert was Bill Koehler who is involved in the regional economy through his non-profit, Team NEO. Referencing the more dire predictions by the other panelists, Koehler presented a more positive outlook for our area. “I have much more optimism based on what I’m seeing locally,” Koehler said. “I actually think it’s a really good time to be in northeast Ohio.”
Koehler noted that during the pandemic, the region’s manufacturing base performed very well. He credited JobsOhio and the DeWine administration with being active in addressing manufacturers’ labor demands. This resilience was noticed around the nation and internationally. There are a number of international manufacturers moving to Ohio such as LG Chem and Foxconn in Youngstown or the Honda plant south of Columbus. He highlighted that around the state, there are efforts to invest in manufacturing capabilities to meet future demands such as in electric vehicles and semiconductors. It is a competitive market, but Ohio is well situated to reap the benefits.
“The real economy in Ohio is doing better. Manufacturing is strong. I was talking to a major manufacturer recently who makes electrical products. He says he’s 71 weeks out in orders,” Koehler shared. “Supply chain issues are part of the problem, but they have really good visibility over the next year in what they’re doing.”
He also credited money from the federal government being used to update infrastructure. In addition to congressional funds, he underscored that various federal agencies are investing in Ohio, such as the Air Force’s Center of Excellence for cyberwarfare in Mansfield.
Koehler noted a 50,000 shortfall of available college graduates for in demand jobs in our area. This means that there are jobs available for which no one is studying at regional universities. In many areas, the demographics are shrinking, which means there are even fewer available workers.
Despite some challenges, Ohio is considered a business-friendly state, he said. “Companies view us as a state they can do business with. We have to make sure that translates at the local level,” he stressed. “I think there’s a lot of opportunity in front of us. I think we’re very well positioned.”
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