The CEO of Best Buy sees high fluctuation in the US economy that will last 12 to 24 months
Minneapolis Federal Reserve chiefs and Best Buy say the uncertainty caused by the COVID-19 pandemic will weigh on the economy in the near term as supply chain disruptions and a labor shortage are expected to continue.
MINNE`OLIS (FOX 9) – Minneapolis Federal Reserve chiefs and Best Buy say the uncertainty caused by the COVID-19 pandemic will weigh on the economy in the near term as supply chain disruptions and a labor shortage are expected to continue.
Corie Barry, Best Buy’s chief executive officer, said she expects the high churn rate to continue for 12 to 24 months amid concerns about health, lack of childcare, worker burnout, disparate lifestyle expectations and many vacancies.
“Unfortunately, I think we’re going to see this labor market fluctuation for quite a while because I don’t see any of these five factors balancing out anytime soon,” Barry told Minneapolis Fed Chairman Neel Kashkari during a Fed-sponsored call Forum Bank.
A record number of Americans quit their jobs and found new ones this fall. Small business owners in the Twin Cities have told FOX 9 they would hire workers – if only they could find them.
In Minnesota, the unemployment rate has fallen to 3.3 percent, the same as before the pandemic began in early 2020. Wages have risen nearly 7 percent over the past year.
Corie Barry, Best Buy’s chief executive officer, expects high labor market turnover to continue for 12 to 24 months.
“The toughest jobs are losing workers,” Kashkari said. “They say there are better jobs out there.”
Best Buy is receiving fewer applications than it has in the past, particularly at the store level, Barry said. But the Richfield-based consumer electronics company has mitigated this by raising its minimum wage for businesses to $15 at the start of the pandemic and streamlining the job interview process with video interviews, she said.
Uncertainty is also weighing on the economy through supply chain disruptions and price hikes, and the rise of the Omicron variant has brought new economic pains. US inflation hit 7 percent in December, the highest level since 1982.
The consumer electronics industry was among the first to experience supply chain bottlenecks in 2020 as demand from people stuck at home with disposable income surged. As the virus surge shuts down manufacturing and shipping in different parts of the world, these bottlenecks will continue to frustrate many industries, Barry said.
“No matter where you are in terms of the product, that’s going to have an impact on any business that’s focused on consumers,” she said. “Unfortunately, I don’t see that as a relief any time soon.”
Neel Kashkari, Minneapolis Fed President
Kashkari said he was surprised by high and persistent inflation in recent months. The Federal Reserve is considering raising interest rates this year to curb inflation, but uncertainty about inflationary factors — particularly supply chain issues — will complicate the decision, Kashkari said.
“This has profound implications for us at the Federal Reserve,” he said. “Because if we had great confidence that these factors that have led to high inflation are indeed temporary, we could say we’ll just let them run their course and of course come back.” But if some of these things look like they’re going to last, then there’s a real danger it will become a self-fulfilling prophecy.”
Consumer spending hit records in 2021 but has slowed as Congress-approved stimulus expires and families use up money saved in the early parts of the pandemic. Retail spending fell in December year-on-year as inflation picked up and expected supply chain problems saw shoppers increase their holiday shopping earlier in the fall.