The Asheville Area Chamber of Commerce held the 25th Annual Metro Economy Outlook at the Grove Park Inn on December 13th, featuring keynote speaker John Manzella. Manzella is the chair of the Upstate New York District Export Council, appointed by the US Secretary of Commerce. He is also the founder of ManzellaReport.com, a resource for global business and economic analysis, and Manzella Trade Communications, Inc., a public affairs, publishing, and consulting firm.

Manzella began by discussing the country’s free market capitalist system’s need for entrepreneurship incentives, reasonable taxes, and an educated and available workforce, the latter of which he said is becoming an increasingly large problem. Despite new technologies and globalization, the middle class is shrinking worldwide. 

The US’s GDP growth rate in 2023 was 2.1%, and averaged 2% over the last 22 years. Manzella said economists predict a growth rate of 1.8% over the next 10 years, and concerns of the risk of recession has improved.

With current interest rates and many developing countries borrowing capital in the form of US dollars, Manzella said there is a potential debt crisis on the horizon, though investing in infrastructure is “good debt.” He also said inflation is “coming down nicely” and “the Feds are not likely to boost interest rates any more.”

Global supply chain disruptions that were a result of COVID are beginning to come to an end. Many people put money into goods rather than services during that time, and are currently shifting back toward a focus on services, though workforce demands for higher wages places upward pressure on inflation.

Trade tensions with China have increased, and Manzella said the US will be receiving fewer “cheap imports” from that country. Chinese wages have increased 170% in the last 10 years, meaning inflation could rise as a result of that. The war between Russia and Ukraine has put high pressure on energy and availability, also putting upward pressure on inflation.

Regarding the housing market, the shortage of 1.65 million houses nationwide will continue to keep housing prices up. With Millennials in their prime buying years, they are demanding housing at the same time as the market is experiencing a vast shortage.

The ability to incentivize is the key to our system, according to Manzella. Bringing the corporate tax rate down stimulated a great deal of activity, though there are now more young people in support of socialism. Typically, a far-left population increases tax rates, which would disincentivize entrepreneurs — a large concern for economists’ predictions.

While unemployment rates were 3.7% in November, federal projections are an increase to 3.8%, then 4.1% by 2025. Manzella said these numbers are not accurate, however. If someone looking for a job stops searching after four weeks, they are no longer considered looking, which artificially adjusts the data, and the actual rate of unemployment is closer to 6%. 

Worker participation rates are continuing to fall, leaving 8.7 million jobs in the US that cannot be filled, 2.1 million of which are in the manufacturing industry. There is also a significant shortage of truck drivers in the country, and the current shortage of 78,000 individuals is predicted to more than double to 160,000 by 2030.

Falling workforce participation rates are driven by factors including baby boomers reaching retirement. One in five men between ages 25 and 34 are unemployed due to incarceration, disability and welfare, and the option crisis, and some are still attending school.

Dropping fertility rates is a factor in the future of the workforce. As a result, there will be fewer consumers, producers, taxpayers, and investors, leading to declining growth and a declining standard of living. Manzella said more comprehensive immigration policies, and an increase in automation within large companies may help mitigate this economic challenge.

The US labor force projects the creation of an additional 6.5 million jobs between now and 2032, but there will be fewer workers between the ages of 16 to 34 than in the 55- to 64-year-old range. Investing in education, participating in referral programs, providing daycare options, and engaging in ‘stay’ interviews before they become exit interviews may be some strategies employers increase retention rates for their companies. Implementing apprenticeship programs and hiring older workers may also provide a boost in acquiring the number of needed employees.

Businesses must continue to pay attention to what works best for their employees in order to retain them. Considerations such as paying per project instead of per hour, allowing flexible schedules, and improving workplace environments may be attractive solutions.

Businesses must also understand globalization trends and where certain populations are increasing in order to capitalize those markets. Manzella said a large amount of consumer growth in South Asia, and US companies need to keep their fingers on the pulse of those markets. Considering additional free trade agreements may help US businesses win import/export contracts with international companies. 

Overall, Manzella said incentivizing entrepreneurs, investing in education, and engaging in international relationships will be the keys to maintaining the US’s economic system. Increasing legal immigration, maintaining capitalism and entrepreneurialism, and having a constitution promoting stability and opportunity will help the country continue to overcome the economic challenges presented now and into the future.