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Numbers show local economy is on the mend, but there's more to the story

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Janet Harrah
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The national inflation rate is at a 40-year high but may start to level out within the next year.

Tri-state unemployment is forecast to decrease in 2022, the GDP is on the rise, and the economy could bounce back to pre-pandemic levels by the middle of next year.

At a Northern Kentucky Chamber of Commerce event Tuesday, Janet Harrah, senior director of NKU's Center for Economic Analysis & Development, said the economy is still fragile because of a variety of unknowns.

"The headline numbers look really good... but lots of times, when you take the next look down, the reason those numbers are growing or improving, sometimes it's actually reflecting weakness underlying," she said.

For instance, unemployment locally is around 3.7%, less than national average, but the reasoning behind that is a shrinking workforce. Nationally, people retired or took early retirement options due to health concerns, and primarily women left the workforce due to lack of affordable, safe childcare options.

"They simply cannot get affordable childcare. We simply don't have enough childcare facilities in our community, for everybody that wants them," she said.

She said inflation, which is currently at 6%, will remain a major issue throughout the next year. It's also a difficult thing to predict due to many variables.

Consumer goods like groceries and gas will bounce back as soon as supply chain issues throughout the world begin to improve.

"They'll come down as fast as they went up, typically," Harrah said. "What won't go down once it goes up: wages, rent and healthcare costs. Once those prices go up, they almost never come back down."

Despite these issues, time will generally give the economy time to normalize.

John Augustine, chief investment officer at Huntington Bank, says globalization will help ensure too many dollars aren't chasing too few goods. More people getting back to work and increased production means companies may be able to increase wages to attract talent.

Looming over the optimistic outlook is the unpredictability of COVID-19. Reports show COVID-19 increased 50% across Europe in the past month. That sparked partial lockdowns in Austria, Berlin, and the Netherlands.

"If we see the same thing happen in Asia with the cold weather, that's going to further disrupt a supply chain. In that case, it's just going to hold down the production of goods and services in China that can't be shipped because they haven't been manufactured," Harrah said.

Handling inflation and supply chain issues is going to be a balancing act for the economy next year, when the pandemic is still a big concern.