Note: This story was produced by the Economic Alliance of Lewis County as part of a monthly special section published in The Chronicle.
The Economic Alliance of Lewis County hosted on Wednesday a Post Covid Summit titled “Covid Unmasked,” which focused on economic opportunities and obstacles for our upcoming economic future.
The summit featured two economists and several legislators and took place at The Loft in Chehalis before a packed house. The economists discussed supply chain disruption, inflation, logistics, rising gas prices and obstacles in hiring competent workers.
The keynote speaker was Spencer Cohen, owner of High Peak Strategy LLC, a Seattle-based economics and research consulting firm with expertise in regional economic analysis, international trade research, and U.S.-China relations.
He is a 2021-2023 Public Intellectuals Program fellow with the National Committee on U.S.-China Relations and affiliate professor in the Department of Geography at the University of Washington.
Cohen is a recognized expert on port economic impacts, U.S.-China trade and economic relations and international trade. He speaks fluent Mandarin.
Mark Harmsworth with the Washington Policy Center also talked economics. Harmsworth, a former Republican Representative with the state Legislature, is a business owner faced with rising transportation costs and difficulties in hiring.
Five state Legislators detailed efforts to help the state economy and the difficulties in working with a Democrat-dominated state government.
Richard DeBolt, Executive Director of the Economic Alliance of Lewis County, in his opening remarks, said he hoped the summit allowed for an atmosphere of open discussions “to help you make decisions as we move forward” from the impacts of the pandemic and inflation woes.
Cohen talked about unpacking inflation causes, supply side complaints, upheaval with trade relations with China and the long term impacts to Washington state.
He said he believes the Federal Reserve is better educated today in dealing with inflation and trade difficulties compared to efforts in the 70s and 80s, adding inflation is simply a reaction to supply and demand. He said last year’s federal stimulus package, supply side problems, China’s lockdown (and tariffs) due to the pandemic and other factors are driving inflation.
“With stimulus funding people are spending more, buying more, which is another cause of inflation,” he said.
He said he is not trying to sugarcoat the impacts of inflation, but did note that wages are up 13.9%. He said with a tight labor market, wages will continue to rise.
Cohen said a particular problem is a lack of truck drivers and limited warehouses as businesses attempt to ramp up as economic patterns change coming out of the pandemic. He added the pandemic has changed our economy. For example, the rise in online purchases has stressed out our warehouses, trucking and ports. He said he does see some relief as trucking costs are starting to drop, although there remains a long haul trucking shortage. He said ports globally are also causing problems as 77% of ports worldwide suffer from backlogs.
“Supply chain is the biggest culprit of inflation,” Cohen said, and “imports are critical to Washington’s economy.”
Harmsworth said drivers of inflation in Washington state are caused by rising gasoline costs, supply chain disruptions, a labor shortage and stimulus payments that allowed people to not work, but still draw federal money into their pockets.
Harmsworth also worries about an upcoming state gas tax that will raise gasoline costs by 50 cents, starting Jan. 1. He said it is no coincidence that the rate increase comes a month and half after state and federal elections.
“It’s a bad idea,” he said. “Washington already pays a high (gas) tax rate.”
Harmsworth said the gas tax will just get passed on to consumers. Higher transportation costs create higher costs in a wide variety of goods and services.
He also pointed out problems with a state carbon tax, and a state mandate to ban gas cars in favor of electric vehicles by 2030. The state considering breaching Snake River dams in Eastern Washington if made a reality would cause electrical rates to jump.
Despite the headwinds, Harmsworth sees blue skies ahead for the Evergreen State and its position as central to the global economy with its proximity to markets in Asia.
“I’m really excited about Washington state,” he said.