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Few will argue how challenging the past three years have been for American households. From 2022’s high inflation making most goods and services more expensive to hoping that 2023 brings better times. That’s at least what consumers are telling us in somewhat mixed signals.
The latest Conference Board consumer confidence index suggests an anomaly where consumers are looking beyond their current financial plight, where inflation is still high, despite coming down from the 9.1 percent in the spring to the current 7.1 percent, and personal savings are at record lows while consumer debt is at record highs. With a confidence index of 108.3 in December, the highest confidence level since this past April when most expected little movement from the 101 in November, consumers seem in a better frame of mind.
Even businesses appear bathed in optimism where the December situation index, an indicator of business and labor market conditions, increased to 147.2 from November’s 138.3. The pessimism normally associated with increasing interest rates from the Federal Reserve was replaced by an increasing expectation index from November’s 76.7 to 82.4 in December, reflecting an optimistic business and labor outlook for the next six months. Whether it is the long-awaited joy of the holiday season or true indicators of what the first six months of 2023 will look like depends on whether workers are looking beyond the slim projected gross domestic product growth in the first quarter of 2023 or negative growth in the second quarter.
A recent survey suggests workers may be looking beyond the economic uncertainties.
In a 2023 New Year’s resolution survey conducted by Workhuman, workers are thinking positive and are seeking improved household finances in 2023. Nearly half are seeking a promotion or a raise at the job they currently have while 32.1% want to find a new, higher paying job. However, in a trend that has developed during the pandemic and continued to become evident in the post pandemic workplace environment, nearly 30% felt the need to be more organized, with 27.9% wanting to create a better work-life balance with just over a quarter wanting to set better boundaries with work.
One just need look at the New York City office vacancies, Long Island Rail Road ridership well below pre pandemic levels, and employee occupancy rates struggling to maintain levels above 50% to see how workers view the current changing workplace.
Meanwhile, the Federal Reserve Bank of New York’s survey of business executives found they needed to recoup 2022’s increased material, labor, and operating expenses, and that regardless of inflation levels, prices won’t be returning to pre-pandemic levels. Service sector prices are expected to increase by 4.7% in 2023, bringing the total price increases since 2022 to 12.1%.
The manufacturing sector is worse, with projected 5.4% increases in 2023 prices, along with the 9.5% price increases in 2022, resulting in 14.9% price increases since the beginning of 2022. Imagine these price increases remaining part of the economy as the Federal Reserve struggles to bring price stability and inflation to its target of 2%.
As 2023 beckons, let’s hope that better economic tidings follow. If not, 2023 will be a long year.
Martin Cantor is director of the Long Island Center for Socio-Economic Policy and a former Suffolk County economic development commissioner. He can be reached at [email protected].
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