2022 Annual Economic Forecast

For Dr. Mary Kelly, there are five areas business leaders need to be mindful of going into 2022: 

1. Technology: How it's used by their companies, their employees and their customers.
2. COVID-19: It's not going anywhere, so everyone needs to get comfortable with it. 
3. Cybersecurity: This needs to be a high priority all the time. 
4. Supply chain issues: These will continue to be a problem this year. 
5. Personnel: The Great Resignation is continuing and will only get worse in coming years as not only Baby Boomers, but Gen Xers retire and Millennials find alternatives to traditional corporate work lives. 

Kelly, an economist, author and U.S. Navy veteran, made her remarks at the annual Economic Forecast Breakfast, co-sponsored by ACG and Financial Executives International. She broke down the five areas to watch in 2022 while forecasting the next few years, too. 

Technology, she said, is all about innovation, anticipating customers’ needs and desire for leading-edge products and services, and embracing what’s new, even if you don’t completely understand it.

“You have to embrace the future,” she said. “Whether that’s crypto, buying property in the Metaverse or accepting all the various payment methods.” 

At the same time, technology has a dark side and businesses and those in the financial space have to be absolutely on point when it comes to cybersecurity, she said. 

Kelly said it's not a matter of if a company will be hacked, it's just a matter of when. Being prepared beforehand means being able to remediate any situation when it arises. 

Embracing technology will help a business to face the very present COVID world we are living in now and into the future. To grow through COVID means businesses need to strategize and optimize their opportunities to differentiate themselves and their products and services. 

“COVID and its variants aren’t going away,” Kelly said. “You need to manage the risks, clients’ confidence, and the wants and needs of your employees.” 

On top of all of this are ongoing issues with the supply chain (we need 80,000 more truckers TODAY, and we are going to see tariffs increase this year) and, perhaps, the most long-ranging problem facing businesses today: the Great Resignation. 

The Great Resignation is exposing many problems that business and political leaders have been ignoring for many years: it’s not just Baby Boomers leaving the workforce that we need to worry about for the future. 

In the last few years, more than 2.1 million people have voluntarily left their jobs, she said. Boomers, many of whom have been working way past the traditional retirement age are “looking at the current situation and saying, ‘we’re out of here.’”

The problem that has been exposed? Generation X adults are squarely in their mid- to late-50s and they are ready to bail on the 60-hour workweek’s stress. And by 2030, those same employees will be approaching their mid- to late-60s and a traditional retirement age. While they don’t have the numbers, Gen Xers do have institutional knowledge and have stayed true to their careers and companies, despite being outnumbered and passed over by Boomers. 

In the short term, Kelly says that the stock market will go up, and down, in 2022 as it does virtually every year. The Federal Reserve is expected to raise interest rates early this year. Inflation will continue to be an issue. 

The housing market is and will continue being a strong area. In the Kansas City area, housing prices rose 12.6 percent in the last year. 

“People here aren’t overpaying for housing,” Kelly said. “The average entry for a home is $186,000, with the ‘moveup’ cost being about $446,000. That’s great for attracting people.” 

Kelly said that industries to watch for growth this year include construction, housing and home improvement, while retail, travel/tourism and hospitality will all remain flat or decline. With unemployment at 3.6 percent in Kansas and 3.5 percent in Missouri, both states are doing well. 

In the future, she said, leaders will need to concentrate on people and numbers to inform their business decisions. She emphasized that more businesses need to concentrate on succession planning and on what they are going to do when Baby Boomers and Gen Xers leave the full-time workforce in the next decade.