Philadelphia Federal Reserve Senior Outreach Economist Ryo Tashiro presented a cautiously optimistic economic outlook at the Northeast Berks Chamber’s Virtual Economic Forecast Presentation on Jan. 15.
“The U.S. economy experienced a record-setting annualized decline of negative 31% in quarter 2, recovering at a pretty fast pace, around 30% in quarter 3. Despite the strong recovery, it should be noted that we’re still pretty much far below pre-pandemic levels in terms of economic activity,” said Tashiro.
During his presentation, Tashiro discussed the overall impact of the COVID crisis to businesses, as well as what can be expected in the near term.
“While we are starting to see some signs of recovery, most sectors were negatively impacted – in particular, the leisure and hospitality sector suffered notable damage,” he said. “The pace of recovery has slowed down in recent months; the news of vaccines are positive, but the near-term outlook remains largely unchanged.”
He also discussed how consumers have reacted so far.
“Lower consumer confidence has resulted in significantly less spending on certain goods and services.”
Tashiro is cautiously optimistic for the 2021 economic outlook.
The economic forecast depends on multiple uncertain factors that include getting the virus under control for a steady recovery, he said.
“Because a very significant portion of our economy (about 70%) is based on consumer spending, until consumers feel completely safe to travel, dine indoors, attend concerts, among other things, it’s hard to imagine that we will recover completely,” Tashiro said. “Second, speaking of consumers, it is uncertain how much of the changes in consumer behavior we observe today is temporary versus permanent.”
Tashiro gave an example. Would most employees who currently work from home return to commuting once the virus is under control or would they keep working from home? “Finally, there is uncertainty of government actions for businesses and consumers until the virus gets under control.”
For example, the eviction moratorium is set to expire at the end of the month. Uncertainty on whether or not this gets extended is likely to affect consumer behavior, he said.
His overall message is this: “We all know that COVID-19 has already had a devastating effect on both the national and local economies, particularly in the leisure and hospitality sectors. While we saw some recovery in the late summer and fall, we are still far below the pre-pandemic levels in terms of economic activity, and more importantly, employment. The path to recovery remains largely dependent on how the virus gets controlled.”
In regards to the distribution of vaccines and the current political climate, Tashiro said, “The news regarding the vaccines was positive, but it will take some time for the effects to show up in economic indicators. As for the new administration, I think it is too early to tell as we have yet to see the details of its economic plans.”
This was Tashiro’s fourth year speaking to Northeast Berks Chamber. Previously, he spoke in 2017, 2018 and 2019.
“I always appreciate the attending Chamber members because they are energetic and ask good questions. Also, because this event is usually held in early January of each year, interacting with local business and community leaders help me understand what’s on their minds and their concerns for the remainder of the year,” he said. “I appreciate the continuous invitations to address the Chamber, and I hope I will be able to deliver an in-person presentation in 2022.”
Northeast Berks Chamber Executive Director Lori B. Donofrio-Galley said that the impact of the economy is felt by even the smallest business entity. Consequently, each year, the chamber engages the Federal Reserve Bank of Philadelphia for a presentation to identify trends and make informed predictions about GDP growth.
“Business owners need to be prepared for what comes next — in the next quarter, the next year, and beyond,” Donofrio-Galley said. “What will recovery look like after the pandemic? How can businesses prepare themselves for their customers and clients? Will there be a slowdown?”
“This session provides reference, data and resources for developing business strategies,” added Donofrio-Galley. “How will businesses adapt or modify what they do based on the forecast for our region, state, and beyond? Hiring, spending and investing are some examples of decision-making that are impacted by the forecast.”
About 50 Chamber members attended the virtual presentation, which was sponsored by Fleetwood Bank. Tim Snyder, president of Fleetwood Bank, serves on the Board of the Federal Reserve Bank of Philadelphia.
“Fleetwood Bank is pleased to once again sponsor the Economic Outlook for the Northeast Berks Chamber. I am, again, honored to be able to introduce Tashiro,” said Snyder.
Tashiro, who works in the research department of the Philadelphia Fed, travels across the third district speaking to various groups about the economic outlook and the functions of the Philadelphia Federal Reserve.
“He tries to avoid using economic jargon so that those without economic backgrounds can participate in those conversations,” said Snyder. “(Tashiro) views these interactions with the public as a two-way street. Not only does he see the importance of informing the public about what is going on with the economy and at the Fed, he also thinks it is important to hear what individuals across the district are experiencing in the economy. Many of the research topics that he has pursued were inspired by these conversations with the public.”
Those topics include his two main areas of focus: labor economics and demographics.
Snyder explained that the mission of the Philadelphia Federal Reserve is to create the conditions that generate jobs, promote price stability and foster economic growth.
“At the Philadelphia Fed, we help shape the nation’s monetary policy, supervise and regulate financial institutes, support the safe and effective operation of the U.S. payments and financial system and promote fair and impartial access to credit and inclusive growth,” said Snyder.
The Philadelphia Fed releases regular surveys of consumers called the CFI COVID-19 Survey of Consumers, which tracks the impacts of the pandemic on employment, income and spending habits. For more information, visit www.philadelphiafed.org.
Tashiro noted that the views expressed during his presentation were his own and do not necessarily reflect those of his colleagues of the Philadelphia Fed or the Federal Reserve.
The presentation, conducted via Zoom, can be viewed on the Northeast Berks Chamber of Commerce YouTube channel under Annual Meeting of Members with Economic Forecast by Ryo Tashiro.
The Philadelphia Federal Reserve Bank serves eastern Pennsylvania, southern New Jersey, and Delaware. For more information, visit www.philadelphiafed.org.