The economic heartbeat could get closer to normal next year

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Good afternoon,

Good news about the economy has been in short supply as inflation rears its ugly head.

A recent Wilmington Trust capital markets report came in on the optimistic side, suggesting that the current wave of inflation should moderate in 2022.

The report was combined with a survey of business owners who were surprisingly optimistic about 2022 despite supply chain issues that will not go away anytime soon.

The pandemic drove innovation at many companies and smart investments in technology could further brighten the outlook for business.

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Tony Roth, the widely quoted chief investment officer for the wealth management business of regional banking giant M&T, compares the current situation to a common cardiac condition.

“Much like an electrical impulse to the heart, trillions of dollars of stimulus provided support to sustain the consumer and business sectors of the economy through the eye of the storm. But, as we look forward to life after the pandemic, we see that the depth of change that the public health crisis has brought to key pockets of the economy has resulted in an ‘economic arrhythmia’.”

While Roth and others in the investing world see a moderation in supply chain issues and labor shortages, the risks of a too slow or too rapid economic heartbeat remain.

The most significant risk lies in a labor supply crunch taking place throughout the world.

One factor, according to the report is YOLO, the “you only live once” attitude that has emerged from the pandemic and led many to leave the labor market. Also, thanks to investment gains, some who rode out the pandemic and did not lose their jobs, now see a path to early retirement.

It is worth noting that Wilmington Trust’s reports appeared to make no mention of Covid-19 variants that add another level of uncertainty heading into the new year.

As this piece was being assembled, the Dow was down by a500 points over Omicron. We know all too well the virus disrupts economies and puts pressure on a healthcare system coping with staff shortages and fatigue over a nearly two-year war.

As of Saturday more than 400 people were in Delaware hospitals with about a tenth of that niumber fighting for their lives. The culprit is the Delta variant that continues to prey on those with comprised immune systems and the unvaccinated.

A final note. The daily newsletter will take its usual holiday break beginning on Friday (Christmas Eve) and reume on Jan. 3. – Doug Rainey, chief content officer.

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