Kevin Depew, deputy chief economist with RSM, sees light at the end of the tunnel as the Quad-Cities and national economy recover and stabilize from the effects of the COVID-19 pandemic.
"Most of us have spent the past 16 months in varying degrees between a little bit of panic, a little bit of uncertainty and a little bit of volatility around all of things around the pandemic as it unfolded," Depew said in a virtual talk with Quad Cities Chamber members Friday. "Well, we are finally at that point where the light is at the end of the tunnel. We continue to make progress in defeating the virus, at least in the ways it impacts us in our daily lives — all of those things that have prevented businesses from being fully re-opened.
Projections show the U.S. economy poised to grow 10.7% in the second quarter, and 7.5% overall for 2021, a reflection of release of pent-up demand and household spending curtailed by the pandemic, Depew said.
Personal income in the U.S. has surged, aided largely by stimulus checks from the federal government. That combined with nearly of $4 trillion in U.S. household savings accumulated in excess of pre-pandenic levels point to a robust recovery, and one poised to continue that path through the year, Depew said.
"We'd have to go back the early '80s for anything that approximates that level of GDP growth," he said.
However supply chain disruptions and difficulties hiring and attracting workers continue to present headwinds slowing momentum in the labor market and creating concern that businesses will be able to meet the spike in demand, Depew told Quad-City business leaders.
He forecast the Quad-Cities economy will grow by about 6% in 2021, less than the nation as a whole, due to difficulties meeting labor supply from a lack of available, skilled workforce. The population of the Midwest is expected to grow older and more slowly in 2021 and coming years compared to the rest of the country.
"The biggest challenge will be to incentivize a younger demographic to come in and build a pool of available workers," including programmers, engineers, designers, analysts and other so-called "knowledge workers," Depew said in an interview. "But, I'm optimistic about the migration we've seen as a result of the pandemic from large cities to more rural or smaller cities. Ultimately, the Quad-Cities and Midwest will benefit from that, but it will take time to unfold."
He urged Quad-Cities business leaders to take advantage of the migration by focusing on tax-based incentives for new tech companies and highlighting the quality of life and low cost of living available in the Quad-Cities compared to higher-density urban areas. He also encouraged leaders to plan for and incentivize additional affordable housing options for people to take advantage of relocation possibilities.
Depew predicted the U.S. economy will generate about 7.5 million jobs this year.
"Even though we're going to generate so many more jobs this year, we still have problems in the labor market," he said. "We have problems on the supply side ... and then we have problems on the demand side, particularly from those who are not qualified for some of the jobs available."
Paul Rumler, president and CEO of the Quad Cities Chamber, said the Quad-Cities region has seen double the volume of corporate construction and business relocation and expansion projects than in 2019 and 2020.
"So things are really on the up and up," Rumler told Q-C business leaders. "There's one big 'if' and one big concern that's on just about every business's mind, and it's about workforce. It's about how do you have the people that you need to perform and meet your customers' demands."
He noted the chamber has worked to help employers meet workforce needs through apprenticeships and internship programs, and encouraged businesses leaders "to be creative" about filling their hiring needs.
Rumler said the chamber is also "polishing off" a new regional branding and marketing campaign.
"And we can't wait to get out there and tell people why they should invest in the Quad-Cities region and help us win that race for economic prosperity," he said.