Dr. Chris Kuehl is becoming an industry icon. When he talks, everyone listens. He may not have a crystal ball (yet), but he does a pretty great job of providing accurate economic insight and analysis.
In July 2021, he led another webinar for NSCA members—Dr. Kuehl’s Economic & Market Recovery Update—to talk about opportunities and challenges posed by the current economy and economic recovery. In other words: What’s going right with the economy … and what’s going “not so right”?
Great News: A Fast Recovery
In terms of the recession, we saw a classic V-shape economy-wide, where the GDP drops very quickly and recovers almost as quickly. Today, we’ve recovered to a position that’s better than where the economy sat before the pandemic. In January 2020, GDP was at 102.3%. It dropped below 90% in April 2020, and it’s now projected to be at 109.2% by December of this year.
Recovery is more unpredictable than the recession itself for many reasons. Interestingly, more organizations go out of business during the recovery stage than the recession phase due to the number of decisions that need to be made during this time—and how quickly an incorrect decision can send things in the wrong direction.
Some sectors of the economy are still having issues, including travel, manufacturing, and entertainment, to name a few—but our industry is closely following the overall economy model and is predicted to experience growth.
The Economic Challenges We Currently Face
Despite the fast recovery we’ve seen, the economy is still experiencing some challenges, including real inflation spiking to a rate beyond 5%.
Inflation is currently elevated based on demand exceeding production, which is predicted to be short-lived as manufacturers catch up. This will likely result in high inflation during Q4 2021 and Q1 2022 as well, along with an elevated GDP.
Lack of Jobseekers
We’re seeing too few jobseekers. There are approximately 10.4 million people unemployed and 9.3 million jobs available, but many of these jobs are higher-paying, skilled positions. While there are between 8 million and 9 million people who will no longer receive unemployment benefits in the very near future, those employees returning to work won’t bring our industry what we need today in terms of skilled workers.
Dr. Kuehl suggests ongoing outreach—all the way down to the elementary-school level—to expose the next generation to careers in technology. This is one of the reasons why we led a team-building event during Pivot to Profit designed to connect the next generation to STEM positions.
Outside the United States, the rest of the world is recovering at a slower pace; there is instability in the developing countries that produce raw materials critical to our industry.
As we all now know, this causes supply-chain issues and product shortages, which lead to delays that impact your projects. The just-in-time model we’ve all grown accustomed to is broken. Some people and companies are hoarding products to make sure they have what they need, causing others to go without—but this may come back to negatively impact them if they can’t drum up enough business to use the products they purchased.
Transportation demand is booming, but drivers and equipment are down, which makes getting materials from point A to point B difficult and expensive. This further exacerbates the problems with our supply chain.
We’ve been sharing lots of advice with members about how to navigate these obstacles. For example, rethink how you start projects and order products earlier in the timeline. Or find vendors willing to allocate and hold products for you until you need them.
Lastly, the country is experiencing a slower pace of vaccinations than expected. While mass shutdowns aren’t expected, this vaccine gap is causing pop-up COVID-19 breakouts that can still be disruptive as they move through organizations and communities.
Many companies are beginning to develop vaccine and virus protocols in anticipation of future viruses and variants.
Listen to the Webinar
Although we captured many of Dr. Kuehl’s high points, there’s still lots of good information left in our recent webinar. To listen to the archived version, and Dr. Kuehl’s predictions, visit this link.
NSCA Accountant Courtney Kerkman contributed to this article.