National and state economies facing unique headwinds in 2022

COVID-19, inflation, supply chain issues, consumer confidence, and interest rate hikes will all play a role, he said. Inflation has been at its highest levels in decades with a yearly growth rate of about 7.1%, primarily driven by higher energy costs.

Inflation has started to tick down in recent months, however, and it has been offset by worker wage growth, Northern Trust vice president and senior economist Ryan Boyles said.

Many countries across the world have found ways to keep their economies open while continuing to protect themselves from the COVID-19 Omicron variant, however, China has continued to remain under lock down.

China has essentially turned itself into a “global factory,” Boyles said. Shutdowns in China have ripple effects across the planet. The Chinese have refused to use vaccines developed in western countries and their own vaccines have been less than effective, he said.

Global supply chains have always been fragile. Throughout the last several decades the chains have operated at optimal efficiency, meaning a product can be built in China and be on a shelf days later in the U.S. This “efficiency squeeze” on the surface appears to be a good thing, but when the supply chain started to crash due to the virus, there were no ways to change it to make it more effective.

Arkansas’ economy has performed slightly better than the national economy during the pandemic and that is expected to continue throughout 2022, Arkansas Economic Development Institute State Economic Forecaster Dr. Michael Pakko said during a conference.

This recovery in Arkansas has led to a dramatic drop in the jobless numbers and in wage growth. This was fueled by job growth in the retail and food sectors. Demand for goods in this economy has been robust but demand for services has declined, he said. This is unusual during a recession recovery period, he said.

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