Logistics Plus

Economic Outlook

Area Employers Shed Light on What May Be Ahead

Facing higher inflation and rising interest rates, experts have indicated that economic growth is expected to decelerate, suggesting a recession is just around the bend. But how mild or severe it may be remains uncertain, given the resilience of other market trends. “One sign that the national economy remains fairly robust is the tight labor market, as reflected by the low unemployment rate and continued job growth, and this is certainly a reason for cautious optimism,” explains Ken Louie, Ph.D., director of the Economic Research Institute of Erie (ERIE) at Penn State Behrend. “However, consumer spending, which is a major driver of the economy, has been slowing down recently.” In fact, recent data suggests that household savings, which were accumulated during the pandemic are now declining, which may further dampen consumer spending. “Expenditure trends experienced by small businesses in the upcoming Christmas shopping season may provide additional clues as to whether the cautious optimism will persist into 2023,” says Louie. One of the best gauges to get a pulse on the economy is from area employers representing different industries, including banking, health care, education, logistics/ transportation and manufacturing.

Banking and Finance

“The Fed has stated its intent to continue to raise interest rates — which makes the cost of borrowing more expensive — as a strategy for bringing down the rate of inflation. As a result,” states Anita M. Kuchcinski, senior vice president, Erie Commercial Market executive for Northwest Bank, headquartered in Warren, PA, “we anticipate a slowdown in borrowing among consumers and businesses due to rising Fed interest rates. Other impacts to consumers that are likely in 2023 as a result of inflation and associated rising expenses include a decrease in personal liquidity and an increase in unsecured debt. It’s important to keep in mind that inflation will eventually decline with Fed action and the idea that one of the best cures for inflation is inflation.” “In addition to the impact of inflation,” Kuchcinski adds, “2023 will see a continuation of the digital transformation in the banking industry as banks place greater reliance and emphasis on digital platforms. The trend of consumers moving toward online banking and other digital solutions grew during the global pandemic and will increase in the year ahead.” According to Kuchcinski, the business outlook for Northwest Bank in 2023 is strong as it continues proactively adjusting to the changing times and economic challenges described above. Examples of how Northwest plans to do that include rolling out additional digital platforms in response to ongoing customer interest in these technologies, focusing on growth and diversification of its commercial banking business, and expanding product offerings as it grows. In Kuchcinski’s opinion, one of the most significant challenges for the banking industry in 2023 is the same one that will continue to affect practically every industry: employee recruitment and retention. “At Northwest Bank, finding, hiring and keeping great employees will remain a primary goal in the year ahead. We’ve developed a number of strategies to intentionally support that effort and create new opportunities for our people, including the introduction of employee resource groups (ERG) recently. ERGs bring together people with a common identity to share experiences, foster engagement, and otherwise contribute to an inclusive, positive work experience.”

“2023 will see a continuation of the digital transformation in the banking industry as banks place greater reliance and emphasis on digital platforms…”