Labor shortage will continue, Fed executive says
The labor shortage that hit American businesses after the 2020 pandemic won’t go away soon, Seema Sheth, senior vice president and regional executive of the Louisville Branch of the Federal Reserve Bank of St. Louis, told the Greater Owensboro Chamber of Commerce’s Rooster Booster Breakfast on Thursday.
Economists knew that the worker shortage was coming, she said, because the baby boom generation — born between 1946 and 1964 — was the largest in history.
Baby boomers were already retiring in record numbers.
And the generations behind them aren’t as large, meaning there were fewer workers to replace those retiring.
Sheth said the pandemic made the worker shortage worse because more people decided to retire early.
People continue to have fewer children, she said, and the limited supply of workers will continue.
The economy saw a sharp decline with the coronavirus pandemic closing businesses for an extended period of time, Sheth said.
The following year, she said, the economy surged.
But it continues to struggle to hit the next gear, Sheth said.
Real incomes have fallen since 2020 because of high inflation, she said.
In most times in the past with high inflation, spending has slowed down. But it continues to be strong this year, Sheth said.
“We’re in a very new moment in time,” she said.
Higher interest rates will last longer than in the past, Sheth said.
Inflation is making it hard for businesses and families to plan for the future, she said.
But, Sheth said, the Federal Reserve Bank is trying to create a stable environment.
Sheth joined the Louisville Branch — which serves southern Indiana and western Kentucky — in December 2021 from PNC Private Bank in Louisville, where she served as vice president and relationship strategist.
By Keith Lawrence Messenger- Inquirer