State Economic Development Bulletin – June 2022

 

State Economic Development Bulletin

Headlines:

Economic Performance  

Economic Outlook 

SEDE News 

Trade 

Industry Trends

Workforce

Finance and Incentives

Economic Performance

Dollar Higher After U.S. Job Growth Tops Expectations (Reuters) The U.S. Dollar Currency Index tracked 0.4% higher against a basket of 6 other currencies. The Dollar’s rise seemed to be buoyed by strong nonfarm payroll numbers in May—which also implies additional interest rate hikes in the second half of the year. A stronger Dollar means American consumers benefit from relatively cheaper import-goods while American exporters suffer as their goods become relatively more expensive.

Federal Reserve Issues Economic Well-Being of U.S. Households 2021 Report (Federal Reserve) The Federal Reserve Board issued its Economic Well-Being of U.S. Households in 2021 report, which examines the financial lives of U.S. adults and their families. The report indicates that self-reported financial well-being reached its highest level since the report began in 2013. Seventy-eight percent of adults reported either doing okay or living comfortably, financially. Financial well-being also increased among all racial and ethnic groups measured in the survey, with a particularly large increase among Hispanic adults. The share of adults who reported that they would cover a $400 emergency expense using cash or its equivalent similarly increased to the highest level since the start of the survey—68 percent—and was up from 50 percent when the survey began in 2013. Eleven percent of adults could not pay the expense by any method.

A 21-Year Case Study into Unemployment Trends (Bureau of Labor Statistics) In this edition of Beyond the Numbers the BLS showcases its “unemployed people per job openings” ratio. In December 2021, job openings topped 11.4 million. This was the highest value recorded in a month since data collection on job openings began in December 2000 and was the sixth time in 2021 that the number of monthly job openings exceeded 10.0 million.

In contrast, the number of unemployed people numbered 6.3 million. At the national level, the unemployed people per job openings ratio was 0.6 in December 2021, compared with 1.6 a year earlier. A ratio of 1.0 means there is a job available for every unemployed person. Ratios less than 1.0 signal tighter labor markets.

Economic Outlook

The Budget and Economic Outlook: 2022 to 2032 (Congressional Budget Office) The CBO regularly publishes baseline projections of what the federal budget and the economy will look like in the current year and over the next 10 years if current laws governing taxes and spending remain unchanged. Here are the highlights:

  • The deficit is set to shrink to $1 trillion in 2022 from $2.8 trillion last year
  • Outlays are projected to average 23 percent of GDP, which is historically high and boosted by interest costs and higher spending on benefits for the elderly
  • Real GDP is projected to grow by 3.1 percent in 2022, and the unemployment rate to average 3.8 percent. After 2022, GDP growth should slow to an average of 1.6 percent between 2023 and 2026, and inflationary pressures should ease to 2.3 percent (PCE) in 2023

SEDE News

Stefan Pryor Resigns to Run for State Treasurer After more than seven years as Rhode Island’s Secretary of Commerce, Stefan Pryor has announced that he is running to be Rhode Island’s State Treasurer! In a note to the SEDE Network, the incoming chair Sandra Watson (President & CEO, Arizona Commerce Authority) noted that SEDE has been very fortunate to benefit from Stefan’s leadership and his dedication to the effort to build our Network as the coalition for peer conversation among state economic development leaders nationwide. During the pandemic, Stefan did an exemplary job convening weekly SEDE calls and securing participation from Secretary Raimondo as well as other White House advisors to preview the presidential transition. We are all truly grateful for his strong leadership as our Chair over the past several years, and we wish him all the best as he runs his race for State Treasurer!

Sandra Watson

President & CEO

Arizona Commerce Authority

Sandra Watson Honored to Assume SEDE Chair Position With Stefan Pryor’s departure to run for State Treasurer of Rhode Island, Sandra Watson announced that she was honored to step into the role of Chair and continue to be a strong supporter of the SEDE Network. Ms. Watson brings more than 28 years of economic development leadership experience to SEDE. She and her teams have successfully attracted to Arizona more than 1,000 companies that have committed to invest nearly $45 billion in capital and create more than 160,000 jobs. During her tenure with the Arizona Department of Commerce, and now the Arizona Commerce Authority (ACA), Ms. Watson served in multiple positions with increasing responsibilities and results. She has led Business Attraction, Business Development, Innovation & Technology, Workforce and Marketing divisions. She served as the Executive Director on the Governor’s Council of Innovation & Technology in advancing the state’s Innovation and Technology roadmap. She currently is the CEO and President of the ACA. Ms. Watson is a collaborative leader who excels in strategic thinking and relationship building. 

Trade

Taiwan Holds Trade Talks with United States (Reuters) John Deng, Taiwan’s chief trade negotiator held trade talks with the U.S. on June 1st after being excluded from a major new U.S. economic plan for the Asia Pacific region. Taiwan expressed its desire to join the Indo-Pacific Economic Framework or IPEF in talks with Sarah Bianchi, one of U.S. Trade Representative Katherine Tai’s deputies, on Taiwan-U.S. trade issues. 

U.S. ‘Actively Considering’ China Trade Tariffs Move (South China Post) Deputy U.S. Treasury secretary Wally Adeyemo said the U.S. is considering reversing Trump-era tariffs on China to reduce domestic price pressures. The administration is weighing how tariff relief might affect U.S. firms’ export competitiveness. Further, the U.S. must balance short term price-relief against the long-term need to address China’s unfair trade practices.

Industry Trends

U.S. Manufacturing Sector Regains Speed in May (Reuters) The Institute for Supply Management (ISM) reported that their index of manufacturing activity increased to 56.1 in May from 55.4 in April. Any reading above 50 means the U.S. manufacturing sector is expanding. Despite its growth, manufacturing still faces major hurdles including an ongoing labor shortage and a demand structure shifting away from consumer goods, toward services.

$127.7 Billion Global Market for Solar Cells and Modules by 2026 (Cision) A new study published by Global Industry Analytics (GIA) predicts a $127.7 billion global market for solar by 2026. The study analyzes new opportunities and challenges to the solar sector in a marketplace which has been transformed by the COVID-19 pandemic.

Automakers, Battery Companies, and Lithium Producers Unite in U.S. Battery Push (Axios) Major auto and battery companies are joining together to advocate for stronger federal support to build a U.S. battery supply chain. The new group will be called the Coalition for American Battery Independence (CABI) and will be run through the lobbying firm Boundary Stone Partners. Today, China produces three-fourths of lithium-ion batteries and owns over half of all lithium, cobalt, and graphite processing and refining capacity.

Assessing the Competitiveness of North America’s States: The North American Subnational Innovation Competitiveness Index (ITIF) On June 21, 2022, the Information Technology and Innovation Foundation (ITIF) held a webinar discussing the results of their new report, the North American Subnational Innovation Competitiveness Index. The report found that Canada and the U.S. excelled in high-skill, capital-intense areas, where Mexico found its competitive advantage in relatively low labor costs. Further, Chihuahua, Baja California, and Tamaulipas lead all other North American states in exports of high-tech products relative to GDP while U.S. states dominated in R&D intensity, and British Columbia and Ontario led all other states in levels of Foreign Direct Investment as share of GDP. Ultimately, the report calls for higher R&D tax incentives, greater coordination of supply chains, harmonization of USMCA digital trade rules, and better aligned economic data availability between the North American states.

Workforce

Robot Orders Increase as Employers Seek Relief from Labor Shortage (Business Insider) Robot orders increased by 40% in the first quarter of 2022 and were up by 21% overall in 2021. Employers are looking for ways to meet demand with fewer workers in the tightest labor market since the second world war.

U.S. Workforce Adds 390,000 Jobs in May as Americans Get a Bump in Pay (WPTV) The U.S. economy added 390,000 jobs in May, despite high inflation and rising interest rates. Businesses in many industries are struggling to find enough workers to meet demand spurred on by rising pay and unprecedented household savings balances. Fed rate hikes are expected to eventually cool the economy, but the May numbers indicate increased rates have not yet had a dampening effect.

Pay Transparency Laws Raise Women’s Salaries (PEW Charitable Trusts) A West Virginia bill would require employers to publish salaries when advertising jobs and would prohibit companies from retaliating against workers who discuss their pay with colleagues. Studies show that salary transparency—coupled with laws prohibiting companies from asking an applicant about their current or previous pay—can narrow the gender pay gap. But research also shows that salary transparency tends to lower men’s salaries even as it raises those of women—and might lower salaries overall. A 2021 from Harvard Business School showed that making pay scales public reduces “the individual bargaining power of workers, leading to lower average wages.” The study found the wages went down by 2%, mostly by lowering men’s pay. The study used salary data from the American Community Survey and compared overall salaries in states where pay transparency exists to those where it doesn’t.

Finance & Incentives

Fiscal Road to Recovery Brief Series (National Conference of State Legislatures) The Fiscal Road to Recovery series examines the allocation priorities of the American Rescue Plan Act of 2021. Some highlights include:

  • Thirty states and territories invested roughly $6.3 billion in Coronavirus State Fiscal Recovery Funds (CSFRF) towards economic relief and development
  • Twenty-eight states and territories invested $7.3 billion of Coronavirus State Fiscal Recovery Funds (CSFRF) for education, including $4.4 billion for K-12 and $2.9 billion for higher education
  • at least 40 states and territories have invested nearly $12.4 billion of state fiscal recovery funds towards health-related priorities
  • Forty states and territories have invested roughly $31.6 billion in Coronavirus State Fiscal Recovery Funds (CSFRF) towards water, sewer, broadband and general infrastructure

Solar Energy Facility Investment in Whitefield County, GA Will Create 470 Jobs (Valdosta Today) Georgia Governor Brian Kemp announced that Qcells, a renewable energy company, will invest $171 million in a new solar module manufacturing facility in Dalton, Georgia — which is slated to create 470 new jobs. Construction of the Qcell facility is expected to begin in fall 2022 and it should be operational in early 2023.

Urban Parks Vie for Interior Department Construction, Renovation Funds (SmartCities Dive) In early May, the Secretary of the interior Deb Haaland announced that $61.1 million in grant funding was made newly available for 27 urban parks and trails projects in 26 cities across the U.S. The funding comes from the Outdoor Recreation Legacy Partnership, a National Park Service grant program that uses federal funds for underserved communities to create and improve outdoor recreation opportunities. 

The State Economic Development Executives (SEDE) Network engages in regular events throughout the year. State Economic Development.org lists these activities and offers an interactive forum for discussion among peers. The website is currently undergoing some minor reorganization including adding resources on how state and local economic development districts can align strategies and collaborate on activities.

The SEDE Steering Committee includes: Sandra Watson (AZ), Chair; Mike Preston (AR); Kurt Foreman (DE); Don Pierson (LA); Kevin McKinnon (MN); Chris Chung (NC); Alicia Keyes (NM); Michael Brown (NV); Andrew Deye (OH); Adriana Cruz (TX); Joan Goldstein (VT); Mike Graney (WV). Leif Olson led the development of this Bulletin; for questions on the content in this Bulletin or for information on the SEDE Network contact Bob Isaacson, CREC Senior Vice President.

For further questions on the content in this Bulletin or for information on the SEDE Network contact Bob Isaacson, CREC Senior Vice President, at bisaacson@crec.net.