Ivan Ilano is an award-winning financial services entrepreneur and bestselling author.
While the challenges relate to the ongoing pandemic forms, vaccination rates and supply chain constraints, the overall sentiment reflects some progress towards normalcy. Labor market reform has been interesting and unexpected, as has Statistics show that employees are resigning To take advantage of opportunities to start new business from current employment. Clearly, a post-pandemic reflection on life, work and purpose in America has arrived
Enabled by record-breaking pandemic-era American personal income and personal savings, the workforce has seized the opportunity to make significant changes in their lives – from where they can choose to live and raise their families or what they choose to make a living. can do. Such mobility, flexibility and in-the-bank cash support have implications – both helpful and challenging as the US economy digests these changes. Looking ahead and connected to this evolving labor landscape, there are three topics that are of particular interest as we move into 2022.
US dollar value
While the US dollar has strengthened in the past three and five years, the depreciating dollar has contributed to the higher trade deficit. Meanwhile, dollar weakness has supported emerging markets and their accumulated debt, as most emerging market debt is denominated in US dollars; So, a weaker dollar is helpful for those economies.
Conversely, with inflation already high in the US, the prospect of even higher prices from a dwindling dollar could exacerbate an already difficult issue. Even higher prices could result in a US consumer pullback. If this happens at a time when supply chain bottlenecks will be resolved, companies may face additional inventories. Heavy discounts will have to be followed to entice consumers, which can largely reduce profit margins.
Commercial-Residential Real Estate Transition
Supply and demand disruptions are possible as the real estate market transitions toward revised land use through local city council zoning laws. The primary driver for this stems from the need for less formal office space, traditionally housing everyone employees in company premises everyone City councils and state legislatures around the US are facilitating more flexible zoning rules to reduce transition friction.
For example, an office building now facing 30% occupancy is in urgent need of filling space to generate revenue and maintain adequate debt service coverage. The prospect of a significant increase in housing supply (especially in major metropolitan areas) will be a welcome relief to many potential home buyers. However, large increases in supply coupled with stagnant demand can result in very low prices, leading to the money effect and consumer confidence.
After several years of low wage growth, the post-pandemic period has demonstrated a reversal. wages are at the end going up, which is a particularly good trend. Higher wages (due to labor shortage) are positive, as are market dynamics. The big advantage is that a union-mandated minimum wage is likely to be lower because market forces impose a higher price. Labor market dynamics may shift into even higher compensation for traditionally low-paying jobs, which are still few and necessary.
In Europe, you generally don’t tip food servers because their employer provides a living wage relative to their household expenses. Here in the US, the same families must pay for health care, child care, elderly care and education, where the European counterparts do not. It is best when markets naturally address supply and demand challenges rather than expecting government intervention.
Whether it’s high salaries for traditionally low-paying jobs, the fluctuating dollar value or a major real estate market transition, 2022 will likely face even more uncertainty than 2021. Post-pandemic decisions will be based on a newly discovered set of labor and consumer behaviours. , which is still being understood. Adding to the uncertainty, choppy equity and bond markets fell on the prospect of a quick asset purchase by the Federal Reserve and an early Fed funds rate hike.
The information provided here is not investment, tax or financial advice. You should consult a licensed professional for advice regarding your specific situation. CRN202412-1382161