WARWICK – Rhode Island business, educational and political leaders on Wednesday expressed caution on the region’s short-term economic prospects that was balanced by optimism that adapting to market conditions can be done through wise investments in education and workforce development.
This was the takeaway from the 23rd Economic Outlook Breakfast hosted by Santander Bank and the Greater Providence Chamber of Commerce, the first post-pandemic assemblage of the annual event held this year at the Crowne Plaza Providence-Warwick.
Panelist Stephen Stanley, chief U.S. economist with Santander U.S. Capital Markets, predicted a labor market cooling, eventually.
After months of an airtight market, there has been “more two-way traffic,” he said. An economy juiced by federal pandemic dollars is slowing down, which he said should be no surprise.
“A lot of what we are seeing is a renormalization,” he said, predicting two additional Federal Reserve rate hikes ending with a benchmark rate slightly above 5%.
Stanely did not rule out a recession but said the private sector with likely “muddle through the year,” with a “short and shallow” downturn happening sometime in 2024
In keeping with tradition, part of the event included attendees responding to a series of economic and business climate-related questions during an unscientific real-time survey. The results paralleled national trends that show a more conservative wait-and-see approach planned by private sector leaders who are hopeful for a deceleration of inflation.
Half of respondents think the economy will be in “somewhat worse shape” in the next 12 months; one-third had the same feelings for their own company’s performance over the past year.
Adequate staffing continues to be an area of concern, according to survey results. More than half of respondents answered that staffing levels cannot meet demand; 38% said their company required skillsets not possessed by current staff.
An indicator of the economic outlook, 80% of respondents plan only a slight increase or no change to hiring in the next 12 months.
Confidence in banks and financial institutions was favorable despite the recent failures; and 47% of respondents do not plan any changes to capital expenditures.
Santander U.S. CEO and President Tim Wennes said that recent client feedback continues to center on the cost of borrowing and rising prices.
“We are hearing and seeing more of these concerns both from business and individuals,” he said. “But the consumer is still strong…I have high confidence we are going to navigate this successfully.”
In his pre-panel speech, Gov. Daniel J. McKee took another shot at the nation’s central bank, of which he has been critical for what he views as prioritizing an economic cooling off over Rhode Island’s workers, calling the approach “a strategy that forces us into some sort of recession. Sending people to the unemployment line.”
“We have not pushed back hard enough on what the Federal Reserve is doing,” he said.
For his part, Providence Mayor Brett P. Smiley, who last night unveiled his fiscal 2024 budget proposal, rebuked the lack of “belt tightening” of the previous administration.
“We are aware of potentially rocky days ahead,” he said.
The panel discussion included Meghan L. Hughes, outgoing president of Community College of Rhode Island and GPCC chairwoman; Sean Edmund Rogers, incoming dean at the University of Rhode Island College of Business; and Michele Streton, CEO and president of Providence Mutual.
Hughes, who was recently appointed to the board of the Federal Reserve Bank of Boston, said that educational institutions should take the opportunity to frontload initiatives that prepare students for a workplace that is rapidly evolving.
“The academy must move much more quickly than we had before,” she said. “We realize that in order to succeed and thrive we have to move [at the speed] of business.”
However, a comprehensive shift to remote or hybrid work can be detrimental to company culture, employee development and mentorship, especially for entry-level staffers, said Hughes.
Conversely, Rogers reminded his co-panelists that business is now operating in a world where “The person down the street can go work [remotely] in Colorado,” so bosses must encourage maximum flexibility.
Streton agreed that “the genie is out of the bottle.”
And like the panel discussion itself, businesses must remain fluid in changing times.
“Moving forward we have to identify what we need to mediate against,” she said.
Christopher Allen is a PBN staff writer. You may contact him at Allen@PBN.com.