by Kenneth J. Entenmann

This past year has been a volatile one for the economy and the financial markets. The main factors that drove uncertainty in 2022 remain the same as we enter 2023—the stubbornness of inflation and its effect on the Fed’s interest rate policies, and the looming threat of economic recession and its impact on corporate earnings. 

All are interrelated.

The main catalyst of uncertainty has been the persistent and pervasive nature of inflation. In response, the Federal Reserve Bank has embarked on an historically aggressive monetary policy change that has quickly and significantly increased interest rates. This change in monetary policy clearly dampened economic activity. The first and second quarter GDP were negative (-1.6 percent and -0.6 percent) while the third quarter GDP rebounded to 2.9 percent. The economy limped into year-end and overall GDP growth will be modest, at best, in 2022. For 2023, the consensus forecast for GDP growth is sobering, with a 60 percent-plus chance for a recession in the first half of the year. 

In the post-COVID economy, it was hoped that inflation would be “transitory.” Unfortunately, inflation continues to remain problematic heading into 2023. The good news is inflation, as measured by the Producer Price Index (PPI) and the Consumer Price Index (CPI), appears to have peaked. PPI peaked at 11.7 percent in March and was 7.4 percent in November. CPI posted a peak rate of 9.0 percent in June and was 7.1 percent in November. 

Both indices have declined every month since their peaks. While this trend is encouraging, inflation remains far above the Fed’s 2 percent target. There continues to be three primary drivers of these pessimistic inflation expectations: supply chain disruptions, commodity prices and labor issues. While some of these factors have improved, others still are a significant concern. 

by Mark Shaw

The economic outlookfor 2023 is the dreaded R word—Recession. 

It`s here. We know the media and our government are not exactly forthcoming saying it’s here, but if you are a consumer you see the change. Technology is often the canary in the coal mine. When tech companies start cutting jobs, that is when we see things starting. 

Amazon, Facebook, Twitter, and just a few days ago Salesforce, recently cut their workforces. Additionally, the news was just released that the financial sector cuts are coming. These two major driving economic forces are the first to start the layoffs. Next up, all of us.

But as a small business owner there is some comfort in the fact that you can probably find some places to cut costs and save money. Ideally, you have probably been doing this all along as the inflation numbers have grown. When it comes to your technology, if you currently have an IT staff, even if it’s just one person, you can use some cost-effective, time-tested methods to meet your needs. 

In today’s world you can outsource your information technology for often a fraction of the cost of retaining a fully loaded employee. Multiple studies shown that firms with 1-10 IT staff members have seen significant savings by outsourcing to an IT consulting firm. I have first-hand experience of the best ways this can and has been done.

By Jim Siplon

Economic development is in the midst of major change. So is our region.

We can no longer focus exclusively on attracting employers. We’re also focused on attracting more people. Warren County and many communities like us are engaged in a war for talent. If we bring great people here, local employers can grow again, and other opportunities will follow.

When asked to step in after the sudden passing of Ed Bartholomew in mid-2020, I assumed the role was focused on attracting, retaining, and growing local business. In short, economic development in the traditional sense. 

What I’ve learned is that achieving sustainable local economies and communities requires those things but so much more. We need analysis, strategic planning, and tactical execution in a wide swath of areas that exceeds and underpins the traditional approach.

Our communities and many of our businesses are struggling to adapt to a future with fewer workers, an aging population, and new stresses on our traditional assets. Significantly, the birth rate locally and nationally has not resulted in enough new workers to replace those who are retiring since the early 1970s. 

Because our local population is older on average than the rest of the nation, New York state and the Capital Region is experiencing this  sooner than other areas. Warren County’s average age is 48. To put that in context, New York State is 39 while the nation is 38 and those are viewed as problematic.