The Garrett County Chamber of Commerce help their annual Economic Forecast event, hosted by Railey Realty and First United Bank & Trust Wealth Management. Railey Realty is proud to sponsor this event each year! The breakfast and presentation were held at Ace’s Run. Presenting the Economic Forecast was Dr. Andrew Bauer, Vice President and Regional Executive for the Federal Reserve Bank in Richmond.
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Dr. Bauer started off this presentation with a brief overview of the global, nationwide, statewide, and local trends. He noted that growth in 2021 was robust but uneven, and showed a downshift in 2021 due to stimulus, pandemic, and supply chains. Consumer and business investment remained strong, however. The extremely tight labor market continued through the year and will be a pressing concern in 2022. Garrett County showed tremendous growth and outperformed the state with unemployment numbers and within the housing market. Dr. Bauer also noted that inflation had a sharp acceleration in 2021, rising 5.8%, but is expected to be more moderate in 2022.
Dr. Bauer noted that Q1 22 has been solid, but that consumer spending has softened. He attributed this is to the overall lack of inventory in many industries – from new cars to homes. As we’ve noted in our market updates, inventory for existing housing has remained at an all time low, despite the high buyer demand and rising home values. He also noted that manufacturing has had robust activity despite the supply challenges the industry faced due to the pandemic and natural occurrences, like the ice storm in Texas.
What they’re calling the ‘great resignation’ continues to cause a very tight labor market in 2022. While unemployment rates are dropping and closer to pre-pandemic levels, the labor force participation rate and employment-population ratio are lower than pre-pandemic. These numbers compare employment rates with those actively seeking jobs. The pandemic forced many out of the workforce, and some have yet to return, or may not return, even as the pandemic becomes less intrusive. Rising wages have also forced a tightening with businesses who must increase their salaries and wages to remain competitive. There are a record number of job openings that aren’t getting filled, with 10.9M job openings, and only 6.5M unemployed.
For Garrett County, the labor market actually shows improvement over the state of Maryland nationwide statistics. Unemployment is actually lower now than pre-pandemic, and the labor force rebounded faster than the State of Maryland. This is most likely due to the increase in tourism that brought thousands of new visitors to Deep Creek Lake in 2020 and 2021. The housing market has seen the biggest increase, with home values rising 23%. The sudden demand for homes in all sectors of the market rapidly decreased inventory, and our local market remains extremely tight.
Looking forward, Dr. Bauer looks for strong but uneven growth, with strong growth projected for Garrett County. There is no positive outlook for the labor market, and he predicts that the already tight market will tighten further as many who resigned or were laid off in 2020 may never return to the work force, leaving jobs open. Dr. Bauer did note that inflation should slow down and return to the normal rate of 1-2% per year. The supply issues are causing many buyers to wait, rather than purchase now, in the off chance that their desired product – whether home or automobile – becomes available later.
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