As the year comes to a close and the COVID-19 pandemic is not yet behind the country, let alone Clark County, where does that leave the local economy for businesses and employees?
“I would characterize my forecast as cautiously optimistic,” said John McDonagh, president and chief executive officer at the Greater Vancouver Chamber.
There are many areas in which the local economy has been strong. McDonagh’s caution almost entirely centers on the pandemic, along with how long the current inflationary period lasts. He doesn’t buy into the idea that the inflation is temporary.
“In order to attract workers, employers have had to increase what they’re willing to pay for positions,” McDonagh said. “Those rates of pay are not going to drop. They’re not going to be able to go backwards.”
Now, those increased pay rates are a permanent part of the formula that businesses use to set the price for goods, he noted.
Labor is the No. 1 challenge across all industries for several reasons, McDonagh said. Some people laid off during the pandemic haven’t returned to work. Some have taken jobs in other industries. Businesses that have reopened have faced difficulties backfilling positions.
One trend that employers are struggling with is people signing up for interviews and then not coming — a practice known as ghosting. Employers will schedule an interview and sit in a virtual meeting alone, while their interviewee never shows.
In other cases, those applying for jobs may just not be qualified for the work they’re applying to do.
“It’s a worker’s market,” McDonagh said.
Employers offering entry-level professional jobs with growth potential are competing with entry- level food service employers. And some food industry employers are offering incentives and large bonuses to attract workers.
“The workforce issue is compounded by the lack of affordable and accessible child care,” McDonagh said.
Child care centers are full, added Janet Kenefsky, vice president of membership and operations at the Greater Vancouver Chamber.
Local businesses are also struggling with supply chain issues.
“Every industry is being hit,” McDonagh said.
A restaurant may order the food for its main entrée, only to have it cost 5 percent to 15 percent more when it arrives. In manufacturing, there’s a delay in getting raw materials.
For other businesses, getting finished goods delivered is the problem. Not only is there a shortage of truck drivers, but ships are still waiting to unload in the nation’s ports.
Not all bad news
But for local businesses, there’s been a lot of good news, too.
Tamara Fuller, chair of the board for the Greater Vancouver Chamber, focuses on commercial real estate. She’s seen a lot of activity in that area and has seen many ambitious ideas for Clark County.
“People are really not slowed down; they’re just being more strategic on where they move forward,” she said. “They’re very positive about an outlook for our area.”
Development has been one of the bright spots in the local economy, McDonagh said. And manufacturing has done well during the pandemic, he added. Most manufacturers have only recently started talking about supply chain issues.
“Storefronts are coming back,” Fuller added.
The Vancouver Mall is seeing more traffic than its Portland-area counterparts, Kenefsky noted. That “says a lot,” she said.
The professional services sector — attorneys, engineers, architects — is where McDonagh looks to get a forecast of the local business economy. And they’re slammed, he said.
“If they’re busy now, then the market is going to be busy for like 18 months,” he added.
Fuller’s barometer of choice is residential housing, which is strong. Commercial real estate follows the residential housing market and the mortgage industry, she said.
Still, there’s cause for caution, as McDonagh noted.
“You have a generation of people who are accustomed to paying very low interest rates, which makes buying cars and homes and big appliances and all that possible,” he said. “If the interest rates increase — which the Fed has said they will — then those major purchases are going to drop, and that will just have a ripple effect on the rest of the economy.”
And for businesses paying millions of dollars for raw materials, such as lumber and steel, that interest rate makes a big difference, Fuller said.
“Inflation could curb a lot of what we see as a pretty robust market coming next year,” McDonagh said.
