Inflation has soared to 7%. Gas prices at the pump are up over a dollar from last year. Bread, butter and the rest of our groceries all cost more.
Yes, higher prices are real. But for most consumers and businesses — at least here in Gainesville and Northeast Georgia — it doesn’t feel like a red-hot economy burning on all cylinders. It’s more like sloshing through heavy wet snow.
I don’t mean to sound insensitive to someone on disability, an elderly retiree on fixed income or a single mother struggling to pay for child care. Inflation is a disease that can sneak up and bite you at the end of the month with less money to spend after the bills
However, for most workers, inflation surprisingly is not top of mind. They’re more concerned about extended delivery schedules and back orders for goods and services like new cars, appliances and long wait times at their favorite restaurant. These days, life is in slow motion.
If you’re building or renovating a house, you really feel the headwinds. Raw materials such as lumber and cement are in short supply, dragging out construction for months while builders hurry up and wait. Windows are another scarce item, as evidenced by all the plastic wrap covering window openings on newly constructed homes and apartments
You could make a point that inflation has been good for homeowners. Their houses are worth 20 to 25% more than they were just two years ago. But there’s a catch. After raking in the profits from your home sale, try finding a home to buy. You’ll either be on a waiting list or you’ll spend a whole lot more money than you gained from your home sale.
Another reason that we’re less worried about inflation is that people have more money in their pockets. At our bank and others around town, consumer deposits are up by nearly 50%.
Statewide, personal income has increased by 8% since the pandemic started back in early 2020, according to Georgia fiscal economist Jeffrey Dorfman. Massive federal spending has allowed Georgians to save an extra $75 billion. In fact, Dorfman reports, “this is the first time in American history we had a recession when credit card debt went down and credit scores went up.”
While the cost of goods is up, you might say inflation is more apparent in our region’s higher wages and salaries — driven up by low unemployment (now below 2% here at home) and aggressive competition to fill job vacancies. It’s ironic that the Biden administration actually achieved its goal of raising the minimum wage to $15/hour — not through legislation but as a result of inflation.
In such demand, workers definitely hold court over employers in today’s economy, another factor helping to numb the sting of higher consumer prices. But if workers are feeling less stress these days, this trend is not the same for their employers, particularly small businesses, who are heavily impacted by the labor shortage and supply chain issues that are contributors to higher inflation.
Recently, several local retailers shared with me their frustration over the slow pace of shipping that messes up the timing of their seasonal sales. This past Christmas, for example, a couple of shop owners told me they received only about half of their merchandise pre-orders from back in the fall. That means they’ll pay more inventory tax when the orders finally arrive in their off-season.
The good news is that many of these retailers still recorded their best sales year in history. But they could have done much better, and we all know that saying about missed opportunities and “making hay while the sun shines.”
We also can be thankful that the pandemic has not shut down our local economy, like so many had feared. We’re doing way better than expected, and I don’t foresee a recession or slowdown any time soon — even with the pending wave of interest rate hikes scheduled this year.
Inflation certainly can’t be ignored, but I believe there are many more positives — like our strong private sector — that will slowly but surely push through the ice and muck out there to continue driving our local and state economy forward in 2022 and beyond.
Ron Quinn, president and CEO of Peach State Bank & Trust, serves as the Georgia delegate for the Independent Community Bankers of America and is former chairman of the Community Bankers Association of Georgia