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DBJ: Wright State business college dean weighs in on economy outlook for 2022

Thomas Traynor

Excerpt from the Dayton Business Journal

As the calendar turns to 2022, local experts are starting to make their predictions for how the regional and national economy will fare in the new year. And while many factors could affect these projections in the coming months, there are both positive and negative indicators for economic growth.

The Dayton Business Journal recently caught up with Tom Traynor, professor and dean of the Raj Soin College of Business at Wright State University, and Richard Stock, director of the business research group at the University of Dayton, to discuss local and national economic trends, factors influencing the economy, industries that will be strong and those that will lag, and overall projections for the economy in 2022. Here’s what they had to say.

What are some trends you’re forecasting for the national economy in 2022?

Traynor: For the first six months, at least, continued moderate growth in the nation’s real GDP (and real total income) and total employment level. It will not be steady growth; GDP and employment will rise slower as waves of Covid-19 wash over the country and faster as those waves subside — just as happened for the past 18 months.

Inflation will remain above normal. The shift in demand from services to goods will continue to push the production and shipping of manufactured goods against capacities in those industries, which puts upward pressure on price while output grows but not enough to efficiently meet demand growth. Demand for services, particularly in-person services, will continue to fluctuate with the waves of the pandemic, as will the ability to supply services (albeit to a lesser extent).

Continued high levels of household savings, even if Covid-related federal payments subside. Higher interest rates — the Federal Reserve will follow through on its promise to raise rates. Note that inflation-adjusted interest rates on treasury bills/notes/bonds are below zero and are likely to remain very low after the Fed increases rates.

What is one of the most significant factors influencing the economy heading into the new year?

Stock: The labor market is extraordinarily tight (3.5% unemployment rate), and unemployment claims are down below pre-pandemic levels. Despite the labor market tightness there are still 13,400 fewer jobs in November 2021 than in November 2019 (381.9 vs. 395.3) in the Dayton MSA and job growth was an anemic 1.4% from November 2020 to November 2021.

What are some trends you’re forecasting for the Dayton-area economy in 2022?

Traynor: For the most part, economic trends for the Dayton region will be similar to those for the nation. Continued moderate growth in employment and income, tracking fairly closely with national trends, rising and falling counter-cyclically with waves of the pandemic. Inflation will continue be a challenge in the region as it will be across the nation. The most important component of the region’s economic base, national defense, will continue to be a stabilizing force for the region’s economy.