What is Philadelphia's economic outlook in 2023?
That was among the main questions local business leaders addressed during the Chamber of Commerce’s event on Friday, Jan. 13.
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On Friday, Jan. 13, the Chamber of Commerce for Greater Philadelphia hosted its Economic Outlook event, forecasting our region's economic future in 2023.
Dr. Patrick Harker, President & CEO of the Federal Reserve Bank of Philadelphia, provided remarks on one key component of forecasting for the future.
“You can’t predict what will happen in the future without having an accurate perception of what’s going on right now,” he said.
To this point, the Chamber also presented the results to the Federal Reserve Bank’s 2023 economic forecast survey of Chamber members.
The survey's main purpose was to answer the question: What is your assessment of changes in business conditions?
More specifically, this is looking back on 2022 compared with 2021, and looking ahead to 2023 compared with 2022.
The survey included representatives from various industries, and asks questions on a variety of topics, from sales and revenues to wage and benefits costs, the impact of COVID, and others in between.
Some of the most glaring findings, according to Harker, include:
- Members reported strong activity in both the region and their businesses in 2022, compared to 2021.
- A vast majority of respondents reported higher prices paid in 2022, compared to 2021.
- Most respondents reported higher prices received in 2022, compared to 2021.
- Firms reported having more full-time employees on their payroll in 2022, compared to 2021.
- Higher labor costs in 2022, compared to 2021.
While there were clear pros and cons between 2021 and 2022, the overall expectations for 2023 are rather mixed.
After his remarks, Harker sat down to take part in a panel discussion to provide more insight into the economic outlook within specific industries.
In addition to Harker, the panelists were Chris Gheysens, President & CEO of Wawa; Marcia O’Connor, CEO and founder of The Connor Group; and Don Smolenski, President of the Philadelphia Eagles; and was moderated by Bill Anderson, news anchor at Fox 29.
Hearing from Business Leaders
Philadelphia has long been considered a sports town.
With multiple large scale sporting events coming to the city in the near future — the World Cup and Wrestlemania 40, to name a couple — Philadelphia is being positioned as such.
“It’s a great example of what I would call public and private partnerships,” said Smolenski, about Lincoln Financial Field’s pull.
For these events to take place, it takes the business ecommunity, civic community, and the sports teams coming together for a common purpose.
Two of those purposes are economic impact and growth.
Smolenski noted that those events are expected to create an excess of $450 billion and $200 billion, respectively.
In terms of growth, Wawa is playing its part, as it announced its goals to double its stores by 2030.
A staple within Philly and the northeast region, it recently announced plans to expand westward to new states, namely Tennessee, Ohio, Kentucky, and Indiana.
Gheysens noted that now is the time to do it.
“Our business took a hit during COVID, but was resilient and rebounded really effectively,” he said.
“It became a little bit of an impetus for growth,” added Gheysens.
Interest rates remain a challenge, however.
Dr. Harker said that the ideal number is to get rates slightly about 5%, and sit there. He provided a concrete reason as to why.
“Who gets hurts the most in this situation? Low, moderate income families,” he said. “Inflation hurts them, but also employment. So, it’s a balancing act between those two.”
He, however, is optimistic about what the future holds, so long as the work is put in to address this challenge.
O’Connor noted recruitment and retention.
She has seen a higher rate of burnout in recent years, as people are being forced to do multiple jobs because they are struggling to find others.
“Because we’re also having a labor crunch… you’re starting to see companies basically very worried about hiring, as well as retention,” said O’Connor.
A way to work about that is to implement a system of career pathing within a company, allowing employees to determine where within the company they want to be in.
That element alone can help address both recruitment and retention, going a long way toward creating the all-important pipeline of talent that is needed across all industries.
One industry that has seen a major boom in recent years is the tech industry.
Tech, as well as education and medical services (eds and meds), are very important to the Philadelphia economy.
Harker also pointed out an important emerging industry, namely life sciences, in which over 1,200 companies are currently employing over 70,000 workers in the Philadelphia region.
O’Connor added, “Because of COVID, we are going through a paradigm shift and a shift in regards to how people work.”
As a result, there needs to be creativity in filling these very needed roles.
There has been a lot of talk about the possibility of a recession heading into 2023.
While it may or may not happen, the key moving forward is finding opportunities within these challenges.