The economic disruptions wrought by the conflict in Ukraine, a disconnect between economic data and Americans’ financial concerns, the State of the Union’s business points, and the latest New England business news are among the top trends from the past week.
The Russian invasion of Ukraine and the subsequent sanctions levied by Western nations have created several economic disruptions, including a more volatile stock market and greater investment risks. The war has also worsened existing supply chain disruptions as several international companies cut off trade with Russia.
At the same time, a Wall Street Journal analysis suggests that the conflict is unlikely to dent economic expansion in the United States. Yet it could result in further inflationary pressures, which the Federal Reserve is still looking to address by increasing interest rates later this month.
Economic concerns despite broad positive trends
Key data continues to reflect a growing U.S. economy. The monthly jobs report from ADP, released ahead of today’s Labor Department numbers, shows that private employers added a greater than expected 475,000 jobs in February. Initial unemployment claims fell by 18,000 to 215,000 after a brief increase attributed to the spike in COVID-19 cases caused by the Omicron variant. And the Federal Reserve’s Beige Book report shows that the economy is continuing to grow at a modest pace.
However, several other reports highlight the increased pressures on Americans’ wallets. These include:
- A Gallup poll showing 78 percent of respondents dissatisfied with the way things are going in the U.S., with 30 percent saying they are concerned about at least one economic issue
- The sixth consecutive month of declining after-tax incomes as inflation bit into wage gains
- A significant share of people taking pay cuts when taking a new job, usually in order to pursue a better work-life balance
- A declining savings rate after Americans put away more of their income during the pandemic
State of the Union
President Joe Biden’s State of the Union address earlier this week touched on several economic and business points, including praise for the growth in American manufacturing and planned actions to address inflation. The White House is also planning steps to address fraud in pandemic relief programs, including a special prosecutor in the Justice Department and increased penalties for misuse of programs like the Paycheck Protection Program and unemployment insurance.
Business news in the New England region from the past week includes:
- A regional business alliance, Businesses for Offshore Wind, has been launched by the New England for Offshore Wind coalition. Founding members of the group say offshore wind offers the potential to shield businesses from unpredictable variations in energy prices.
- State legislators in Connecticut are considering numerous bills designed to address a workforce gap in the state, as the labor force remains below pre-pandemic levels and about 110,000 positions are open statewide. Efforts range from easing regulations to recognizing out-of-state licenses for some in-demand industries.