MINNEAPOLIS (FOX 9) – Minneapolis Federal Reserve and Best Buy chiefs say uncertainty caused by the COVID-19 pandemic will cloud the economy in the near term, with supply chain disruptions and labor shortages work likely to continue.
Best Buy chief executive Corie Barry said she expects high job market churn to continue for another 12 to 24 months due to concerns about health, inconsistent child care services, worker burnout, different lifestyle expectations and many open jobs.
“I think we’re going to see this labor market unraveling for a while, unfortunately, because I don’t see any of those five factors dissolving in the short term,” Barry told Minneapolis Fed President Neel Kashkari during an interview. of a forum sponsored by the Bank.
A record number of Americans quit their jobs this fall and found new ones. Small business owners in the Twin Cities told FOX 9 they would add workers — if only they could find them.
In Minnesota, the unemployment rate fell to 3.3%, matching the mark before the pandemic began in early 2020. Wages have risen nearly 7% over the past year.
Best Buy chief executive Corie Barry expects high labor market churn to continue for another 12 to 24 months.
“The toughest jobs are losing workers,” Kashkari said. “They say there are more attractive jobs there.”
Best Buy is seeing fewer job applications than in the past, especially at the store level, Barry said. But the Richfield-based consumer electronics company mitigated that by raising its corporate minimum wage to $15 at the start of the pandemic and streamlining the job interview process with video interviews, it said. she stated.
Uncertainty is also weighing on the economy due to supply chain disruptions and price increases, and the surge in the omicron variant has inflicted further economic hardship. US inflation hit 7% in December, its highest level since 1982.
The consumer electronics sector was among the first to experience supply chain bottlenecks in 2020 due to an increase in demand from people stuck at home with disposable income. With the virus outbreak that has halted manufacturing and shipping to different parts of the world, these bottlenecks will continue to frustrate many industries, Barry said.
“No matter where you are in terms of product, it will have ripple effects for any consumer-facing business,” she said. “I don’t see that fading anytime soon, unfortunately.”
Minneapolis Fed President Neel Kashkari
Kashkari said he has been surprised in recent months by persistently high inflation. The Federal Reserve is considering interest rate hikes this year to tame inflation, but uncertainty over inflationary factors — particularly supply chain issues — will complicate the decision, Kashkari said.
“This has profound implications for us at the Federal Reserve,” he said. “Because if we had great confidence that these factors causing high inflation were in fact temporary, we could say that we will just let it run its course and come back naturally. But if some of these things seem to linger, so there’s the risk of it becoming a self-fulfilling prophecy.”
Consumer spending hit record highs in 2021, but has slowed as stimulus measures approved by Congress end and families use the money saved during the early parts of the pandemic. Retail spending fell in December from a year earlier as inflation rose and customers increased holiday shopping earlier in the fall due to expected supply chain issues.