The impact of worker shortages on supply chains

Improvements in untangling supply chains have been offset by lingering worker shortages, America’s top business lobbyist said in her comprehensive economic forecast for 2023.

U.S. Chamber of Commerce president and CEO Suzanne P. Clark described how despite economic uncertainty, American business is “strong and optimistic” and will continue to lead the country forward this year.

“Business demands better from our government because when it comes to Washington, the state of American business is fed up,” said Clark. “The polarization, gridlock, regulatory overreach, and inability to act smartly and strategically for our future is making it harder for all of us to do our jobs and move this country forward.”

“We need a government that works. A government that rejects gridlock and chooses governing. A government that can partner with the private sector on our biggest challenges and can engage globally to advance America’s interests, and the world’s. A government that limits itself to the work only it can do — no more and no less.”

Clark called on Congress to begin work on an Agenda for American Strength that can “help us not only navigate the present moment but also steer our country to the brighter, stronger future that we expect—and future generations deserve.”

The Chamber listed several economic challenges: the threat of a recession, worker shortage, overregulation, geopolitical uncertainty. Amid these challenges, confidence in government’s ability to help is low.

“There are big challenges and big opportunities that demand leadership on the part of our policymakers and partnership between government and business,” Clark said at the Chamber’s State of American Business report. “Business is ready… We’re putting forward a plan, because that’s what business does.”

Called an “Agenda for American Strength,” the plan is designed to unleash problem-solving for American business. It includes:

More building. This entails literally building on the $1.2 trillion long-term infrastructure bill passed last year. Clark said a simpler, more streamlined business permitting process is now needed;

Make it simple. Pass a permitting reform bill to deliver on the investment made in infrastructure;

Fix immigration. This includes adding more employment visas to fill key openings. Average wait times for those visas now exceed 60 weeks, an unacceptably long period;

Increase domestic energy production. Clark called this the “single most important thing” that Washington can do this year; and

More trade agreements. The U.S. has not entered into an international trade agreement in more than a decade. The U.S. and Britain are talking about entering into one, but it is not complete.

As part of the annual State of American Business event, the U.S. Chamber of Commerce launched its “State of American Business Data Center” to capture the economic challenges facing businesses and reinforce the need for government to pursue solutions over gridlock.

To diagnose the health of the business community and economy, the Chamber’s new data center analyzed 12 economic indicators. These crossed business topics including workers, initial public offerings (IPOs), consumers, supply chains, energy and innovation.

At the start of 2023, the data paint a mixed picture:

Shortage of U.S. workers nears record: The Chamber’s Worker Shortage Index reading is near an all-time low at 0.73, meaning for every 100 job openings there are only 73 available workers.  This is especially true in long-haul trucking where the American Trucking Associations estimates a shortage of 80,000 drivers;

Consumer spending is strong: Even though inflation is near 40-year highs, spending has also been high, up 8.2% annually in 2022;

Supply chain strains are easing: The New York Federal Reserve’s Global Supply Chain Pressure Index is at 1.0, down from a pandemic high of more than 4.0 in 2021;

Energy prices are coming down, now beginning to stabilize: Energy prices have been at record highs during the Russian invasion of Ukraine; and

An uneven innovation ecosystem: The U.S. continues to churn out patents in strong numbers, but less than half go to U.S. residents.

The State of American Business Data Center is designed to build on the Chamber’s expanding portfolio of economic data content covering the worker shortage, immigration, equality of opportunity, competition and more.
Adena Friedman, chair and CEO of the NASDAQ stock exchange, said there were about 200 companies “on file and ready to go public this year.” That compared with a sagging IPO market and loan market last year. The number of IPOs coming to market has dropped below average with just 180 new IPOs last year.

“Predicting inflation and interest rates are keeping investors on the sidelines,” Friedman said in a video address to Chamber members. “Those things are unknowable now.”

“The most important thing for investors to be able to do is to predict the future, and it’s been extremely unpredictable,” Friedman added.

Another wild card is how a Republican-controlled House of Representatives can work with a Democratic-controlled Senate and President Joe Biden, who often has pushed for more bipartisanship.

“We have a Democratic Senate and a Democratic President so unless we work in a bipartisan manner, nothing will get done,” Rep. Dave Joyce, R-Ohio, said in a conference call with Chamber leadership. “We’ve got the goal, as a whole, of breaking through Washington’s dysfunctional partisanship to deliver results for America.”

Raising the debt ceiling is absolutely mandatory, Joyce added. “We need to start negotiating with members on both sides of the aisle to get the good ship America back out at sea,” Joyce said. “We need positive work going forward.”

On the other side of the aisle, Rep. Abigail Spanberger, D-Va., said immigration reform was “the most pressing issue” Washington is facing. “I think immigration reform is the most pressing and urgent of those priorities, and by extension, hopefully the first of those priorities that we can make progress on,” Spanberger said.

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