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Message from the President | November 2021

headshot of Eric Faulkner
Eric Faulkner, President

As much as I would like to avoid the subject, COVID still dominates the headlines and our economy. Rather than focusing on vaccination rates, infections, and PPP loans, I would like to discuss some additional impacts of the Pandemic.

First, the supply chain. We’ve all read the headlines: cargo ships waiting in the ocean outside of California; everyone needs to buy Christmas presents early this year; there is a national pumpkin shortage! It can be overwhelming to filter through all of the information and determine what impacts each of us and our markets the most. In speaking with our business clients, we consistently hear that raw materials have decreased substantially and wait times have in some cases quadrupled.

The net result of these issues is an increase in the cost of the goods you purchase. Most retailers and manufacturers were able to bear some of the initial increase but we are beginning to see prices rise across the board. During the September Federal Reserve meeting, the Federal Open Market Committee (FOMC) increased its predicted annual inflation rate to 4.2% by year’s end. To put this in perspective, the US inflation rate in 2020 was 1.23% and it has not been higher than 3.5% since 2008. The FOMC does foresee inflation cooling to 2.2% next year, however, many economists believe we are in for a longer run.

Finally, employees (or lack thereof). During this crisis, the Government pumped historical amounts of liquidity into the US economy through direct checks to Americans and various other programs. While many Americans needed the money for food, bills, and housing assistance more than 25% saved this money. Now that businesses are reopening, they are finding it harder and harder to attract employees. Currently, there are over 10 million available jobs in the US. There are many reasons why these openings are difficult to fill including the aforementioned savings. Some older Americans chose to retire early rather than re-enter the workforce. Additionally, others have shifted to a more family-focused and flexible mindset. The question remains, how much longer will some choose to stay away from work, or are we seeing more of a permanent change?

The supply chain, high inflation, and lack of employees are all challenges. At CNB, we are actively working with our business clients on ways to assist them in growing their businesses despite these obstacles. Are you experiencing similar issues? Reach out to your CNB Business Banking Officer and let’s discuss ways to partner and keep your business strong.

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