President Joe Biden famously, and matter-of-factly, announced recently that the pandemic is “over.”
Whether that’s true or not remains to be seen, but what isn’t in question is the fact that, while the pandemic may indeed be a matter for the past tense, businesses large and small continue to face a mountain of challenges, many of them stemming directly or indirectly from the pandemic.
This much was made clear in a recently released MassINC survey that revealed, among other things, that just over half the businesses polled, 53%, are reporting revenues lower than before the pandemic.
Meanwhile, inflation is at a 40-year high, supply-chain issues persist, a labor shortage continues, the Great Resignation is far from over, and now there is apparently a new workforce issue to contend with — so-called ‘quiet quitting,’ whereby employees don’t officially leave their jobs; they just do the bare minimum.
We’re not sure if quiet quitting is a byproduct of the pandemic or not — it’s a relatively new phenomenon, and there is not much data on it — but just about everything else is, from inflation to the supply-chain issues to the persistent problems companies are having with staffing up.
So while it’s good to hear that the pandemic is over — at least in a technical sense; we’re now told that COVID is in the same category as the flu — the ‘normal’ that everyone in the Western Mass. business community was seeking ever since we first heard of COVID seems like it is still a long way off.
Especially with growing talk about a recession, when it will come, how severe it will be — and whether or not we are already in one, which many economists already believe we are, as well as headlines about soaring energy costs and escalation of fighting in Ukraine.
Maybe the biggest issue, though, is the Federal Reserve’s ongoing fight against inflation. The Fed recently raised interest rates again, this time by three-quarters of a point for the third straight time, an aggressive tactic that might — that’s might — bring inflation back down to its 2% goal, but at a potentially high cost when it comes to the economy and the plight of businesses large and small.
Indeed, the tactics used to fight inflation may well tip the economy into a recession and, in the meantime, make it harder for businesses to attain the capital they need to expand, prompting more job cuts; many businesses have already gone from hiring to laying people off. Fed policy makers are projecting that the jobless rate will reach 4.4% by the end of 2023, up from its current level of 3.7%.
Overall, the cure may be worse than the disease, as the nation witnessed 40 years ago, when, to tame inflation, the Fed pushed the country into a protracted recession.
President Biden also said recently that he believes that a “soft landing” is possible for the economy. Perhaps, but many economists are predicting a much harder fall.
That’s not what area business owners want to hear after two and a half long years of battling the pandemic and its many side effects.
Technically speaking, the pandemic is over, but the challenges remain. We said back in March 2020 that the local business community was resilient and up to the challenge. We still believe that, but this resilience is certainly being tested, and the quest for normal — whatever that is — goes on.