WILLIAMSBURG-Rising prices and a lack of workers will continue to affect the economy on both the national and local level throughout 2022.
That’s what Peter McHenry, an associate professor of economics and public policy at the College of William & Mary, told city leaders and business leaders during the monthly Williamsburg Business Roundtable on Tuesday, March 15.
The covid-19 pandemic has in part led to both inflation and a shortage of workers, which localities everywhere are currently experiencing.
“Inflation is a big deal, and hiring workers hasn’t been easy,” McHenry said.
In February 2022, the inflation rate was nearly eight percent.
“That’s a lot, and is something we are concerned about,” McHenry said during his presentation.
McHenry cited two reasons for the higher prices: Supply chain disruptions that resulted from the pandemic, which shutdown businesses for an extended period of time, slowing the production process of materials and the transportation of goods, as well as people preemptively setting higher prices in anticipation of inflation. The latter, a self-fulfilling prophecy, could have long-term repercussions.
“That can be bad,” McHenry said.
The good news regarding the inflation situation, McHenry said, is that the Federal Reserve is carefully addressing concerns about long-term inflation. Professional forecasters, he added, are also predicting a slower, more moderate inflation rate in the future.
Worker shortages have also had an impact on the economy throughout the pandemic. The shortage can be attributed to several factors: schedule disruptions due to lack of day care and virtual schooling; collective trauma for some people as a result of the pandemic, which made it “hard to get up in the morning for work,” McHenry said; a shift in priorities; and monetary assistance from the government and charities, which has “reduced the urgency to return to work,” McHenry said. What is being dubbed as “The Great Resignation” in the fall of 2021-a time period when an influx of people quit their jobs-has also affected the workforce.
The number of current workers in Williamsburg, James City, and York County is still only about half as what it was in those localities in January 2020 just before the pandemic began. While there has been some rebounding, it is going to take more time.
“Right now, there is less trust in institutions,” McHenry said. “Trust matters a lot. It has to be earned back.”