Editorial: A spring of optimism should await us
Our reality these days feels remarkably different than where we were a year ago, now more than two years into the pandemic.
Most have shed their masks, gotten their vaccinations, returned to at least some in-office days and begun to venture out again for fun. After the rollercoaster years of mask-on, mask-off, tiers of “essential” workers, hand-wringing over holiday gatherings, and more – it has been a welcome change of pace.
I’m not alone in feeling that COVID as we once feared may be over. In March, the state’s COVID-19 website saw the fewest number of visits since it was set up in March 2020 – fewer than 3,900 visits a day in a state of nearly 1 million people.
I got to attend the first Opening Day at Citizens Bank Park earlier this month, and it was a breath of fresh air to see tens of thousands of fans congregating again in the ballpark to cheer on the Phillies. Oh, how I missed that.
Despite that welcome relief though, as I look around recently to the people I encounter, many are not optimistic at the moment. They are angry about inflation pushing costs for families higher, a dearth in the housing market that has kept homes out of reach for many, and a political and social divide that seems to grow deeper by the day.
I was surprised to see a recent I&I/TIPP poll that found fewer than one in five respondents (20%) said they were “better off” than they were a year ago, while more than twice that number — 42% — said they were “worse off.” Another 36% said they were “about the same.”
To me, that sentiment feels entirely due to inflationary pressure and “sticker stock” at the gas pump. From the data I see, the average American has every reason to be optimistic about where we are today despite the higher grocery bill.
In March, the nation saw 431,000 new jobs created, outperforming many pundits’ expectations. It marked the 11th consecutive month of at least 400,000 jobs created, and it has pushed the national unemployment rate down to 3.6.%. That is only 10 basis points higher than February 2020, or the month before the pandemic began.
Those new jobs have also led to higher salaries for workers, with average hourly wages rising 5.6% over the past 12 months, or nearly three times the annual rate of inflation. For leisure and hospitality workers, including those who work in hotels, restaurants and bars, wages have increased 11.8% as the typically low-wage employers fight for a fewer number of available workers.
Many workers in high-demand sectors are receiving retention or signing bonuses, while I’ve heard from others that they are receiving bonuses to put off retirement.
For those switching jobs, it’s even easier to negotiate higher wages as the market averages rise. At the same time, many Baby Boomers nearing retirement age are determining that now is as good a time as ever to leave the workforce. Despite some monthly dips, the S&P 500 is up about 90% from the pandemic low, helping to pad 401(k)s and IRA accounts.
All of these positive movements are not to discount the troubles we do currently have.
The unadjusted U.S. inflation rate increased 1.2% last month, pushing year-over-year inflation to 8.5%, the highest rate in 40 years. Gas prices also jumped 18.3% in March, touching new record highs of $4.31 a gallon. These are not unimportant figures, especially to the business owners looking to keep fleets on the road, kitchens stocked and factories working.
But while inflation is a problem, it isn’t one that has convinced many Americans to stop reaching for the pocketbook. Consumer spending has increased 17.6% year-over-year through February, according to the Commerce Department.
Flush with cash and savings supported by government stimulus over the past two years, rising wages and historically low interest rates until just recently, most Americans are grumbling about the price at the pump but paying their $70 and moving along.
Another thing to keep in mind is that while inflation may be outpacing wage growth right now, it is highly likely that the Fed’s monetary policy will push it back into range in the next year or two, while the newfound worker wealth will remain.
Just as we focused on the post-pandemic scenes of full ballparks two years ago, it’s helpful to remember that we’re unlikely to see ‘70s-style inflation in 2024. Let’s prepare for better times.