Heading into a rather busy week, I took inventory of stuff to write about this week, trying to organize in case of any other developing news this week, particularly coming out of the Federal Reserve meetings. Personally, though inflation remains a bit sticky and perhaps, even on a slight upward trend due to rising energy costs, I don’t see the Fed raising rates. The good news is that capital won’t get more expensive and the bad news is that capital will remain expensive, and tough to access.
Transitioning, the title above fits as the top concerns for CEOs via recent report Marcum (accounting firm) and Hofstra University’s School of Business include political uncertainty (45% of CEOs) and interest rates/cost of capital (44%). The report is available here: Marcum-Hofstra-CEO-Survey-No1-2024
I follow healthcare as an industry, primarily, but overall economics and business are also of interest because the same represent overall trends that influence (or can), healthcare. Given the sheer size of the healthcare industry, its influence on the overall U.S. economy and its measure in GDP and government spending is impactful across most business/industry segments. Depending on which metric or statistical set one analyzes, healthcare is either the largest industry in the U.S. or always, within the top 5 (IBIS has it as #2).
The Marcum survey is interesting in so much that CEOs tend to be a rather optimistic bunch (I know, I was one for 30 plus years). Healthcare CEOs have had much to be pessimistic about, especially during COVID, but in this survey, their optimism rebounded a bit. Compared to the prior survey, 56% of healthcare CEOs were optimistic compared with 25% in the previous survey. Sector declines were in financial services (37% versus 44%) and manufacturing (31% compared with 48%). Of all CEOs surveyed, 42.6% were optimistic about the near-term future.
A major concern for healthcare CEOs is shared among all industry leaders – staffing or labor. “Despite persisting uncertainties, most CEOs (80.1%) are poised to sustain or increase staffing numbers, with only 11.3% anticipating cutbacks and 8.6% adopting a cautious approach to hiring for the forthcoming year,” according to the Marcum report. The challenge of course, is finding staff to fill openings or to increase labor levels.
With a slight increase in unemployment and overall employment appearing to slow down as the economy cools (except for government employment and healthcare), employment trends may improve. While that sounds a bit contrasting, recessions or slow growth periods reallocate labor and jobs. In the last CPI report, wage growth fell by .4%. (https://rhislop3.com/2024/03/12/econ-tuesday-houston-we-have-a-problem/ ) Continuing softening of employment rebalances wage growth and allows for a redistribution of work toward more full-time employment v. part-time labor or multiple job wage earners, once normalized growth and moderated inflation return.
As the Fed meetings conclude this week, I’ll review salient commentary and provide an economic update and perhaps, some commentary on my outlook for the balance of the year.