>> HOUSING PRICES, ENERGY COSTS, FOOD, ARE WE HEADING TO ARE A RECESSION?

ARE WE ALREADY IN A RECESSION?

THOSE ARE THE QUESTIONS THAT BOUNCE AROUND HOUSEHOLDS AND BOARDROOMS AND WE WILL UNPACK THAT HERE IN THE EARLY FALL.

I'M CHRIS WILLIAM, AND WELCOME, AGAIN, TO THE MOST WIDELY WATCHED AND LONGEST RUNNING PROGRAM ON CAROLINA BUSINESS, POLICY, AND PUBLIC AFFAIRS SEEN EACH AND EVERY WEEK ACROSS THE CAROLINAS FOR MORE THAN THREE DECADES NOW.

WE START WITH FOUR RESIDENT ECONOMISTS, AND WE WILL UNPACK THINGS LIKE RECENT DEVELOPMENTS IN GREAT BRITAIN AND HOW THAT AFFECTS US HERE IN CAROLINAS, AND WE START RIGHT NOW.

[ THEME MUSIC ] ♪♪ >>Announcer: ON THIS EDITION OF "CAROLINA BUSINESS REVIEW," DR. NICHOLAS HILL OF AND DR. LAURA ALRICH FROM THE FEDERAL RESERVE BANK OF RICHMOND.

AND DR. JOHN CONITIN OF UNC CHARLOTTE.

>> WELL, HAPPY FRIDAY.

WE ARE GLAD TO WELCOME ALL OF OUR ECONOMISTS AND DOCTOR, YOU ARE BRAND NEW TO THIS GANG.

WE HOPE YOU MAKE IT THROUGH IT.

[LAUGHTER] WE ALSO ARE EXCITED THAT YOU ARE HERE FROM A FINE INSTITUTION DOWN IN ORANGEBURG.

ALL KIDDING ASIDE, DR., WE WILL START WITH YOU.

WE SAW THE TRAGIC LOSS OF HER MAJESTY, THE QUEEN, IN GREAT BRITAIN AND WHEN WE SPEAK OF U.K. AND GREAT BRITAIN, WE SEE FORECASTS OF INFLATION AND ENERGY COSTS AND BRITAIN, BY THE WAY, IF PEOPLE DON'T KNOW, IS ONE OF OUR SINGLE LARGEST TRADING PARTNERS IN THE CAROLINAS AS WELL AS SINGLE LARGEST INVESTORS-- FOREIGN INVESTORS INTO THE CAROLINAS.

ARE WE GOING TO SEE ANY OF THESE ISSUES THAT ARE FORECAST TO HAPPEN IN WESTERN EUROPE AND THE U.K.?

WILL THAT END UP HAPPENING HERE IN THE U.S. OR SPECIFICALLY IN THE CAROLINAS?

>> YEAH.

I THINK IT'S ANYTHING-- IF WE LEARNED ANYTHING IN THE PAST YEAR WITH WHAT WE HAVE SEEN WITH ENERGY AND OIL PRICES IN THE U.S., WE'RE NOT DISCONNECTED FROM THE REST OF THE WORLD.

WHAT HAPPENS IN THE REST OF THE WORLD HAPPENS HERE.

I WAS READING THAT NATURAL GAS PRICES IN THE U.K. IS UP 96% AND ELECTRICITY IS UP OVER 50% AND THEY'RE SEEING HIGHER PRICES IN EUROPE AND WITH THE QUEEN PASSING AND A NEW PRIME MINISTER THIS PAST WEEK, THERE'S A LOT GOING ON THERE.

I THINK IT SHOULD BE SHORT-SIGHTED TO THINK THAT WE WOULD BE COMPLETELY ISOLATED FROM EVENTS LIKE THAT WITH A CLOSE TRADING PARTNER LIKE THE U.K. AT THE SAME TIME, I WOULDN'T EXPECT TO SEE SOME SORT OF EXTREME RESPONSE HERE OR REACTION OR IMPACT HERE.

BUT WE'LL SEE SOME IMPACT.

>> Chris: DR. HILL, HOW DO YOU LOOK AT THAT FROM THE PALMETTO STATE AND THE REGION?

WHAT DO YOU THINK?

>> SO ONE OF THE THINGS, LIKE LAURA SAID, UNCERTAINTY HAS ALWAYS BEEN AVAILABLE AROUND THE GLOBE AND GIVEN ALL THE INCIDENTS THAT'S OCCURRING, WE'RE WAITING TO SEE HOW THE MARKET RESPONDS TO THAT.

RELATIVELY SPEAKING WITH THE PALMETTO STATE AND IMPORTANTLY, THERE ARE DIFFERENT TYPES OF WAYS THAT WE CAN KIND OF PIVOT, ADJUST TO SOME OF THE SUPPLY CHAIN DISRUPTIONS THAT IS OCCURRING, BUT WITH THE ENERGY SHIFTING AND MOVING THAT'S GOING ON, WE ALREADY SEE IT ACROSS CALIFORNIA, ACROSS TEXAS.

WE ALREADY SEE THOSE TYPES OF ISSUE YOUS THAT ARE OCCURRING.

HOWEVER WE PIVOT DURING THIS TIME WILL HELP WITH OUR SUCCESS.

>> JOHN, HOW DOES THIS-- >> GO AHEAD, JOEY.

>> I THINK WE HAVE TO THINK ABOUT GERMANY AS WELL.

THAT'S THE OTHER COUNTRY I WOULD ADD.

GERMANY HAS ENORMOUS INVESTMENTS IN SOUTH CAROLINA.

CERTAINLY ONE OF OUR BIGGEST TRADING PARTNERS BUT ALSO SIGNIFICANT FOREIGN INVESTMENT, MANY GERMAN COMPANIES IN SOUTH CAROLINA, BMW BEING PERHAPS THE MOST FAMOUS EXAMPLE OF THAT.

SO WHEN WE SEE CHANGES IN GERMANY WITH RESPECT TO ENERGY PRICES AND THOSE ARE GOING UP, GERMANY IS LOOKING AT A POTENTIAL SHORTAGE THIS WINTER, THAT'S GOING TO AFFECT THE MANUFACTURING PROCESS AND WHAT THEY'RE LOOKING AT LONG TERM AS WELL, AND AS WE SEE INTEREST RATES RISE TO COMBAT THE HIGH INFLATION, THAT ALSO IMPACTS THE COST-- THE MANUFACTURERS IN SOUTH CAROLINA.

BECAUSE EXPORTS BECOME MORE EXPENSIVE FROM THE PERSPECTIVE OF FOREIGN BUYERS, AND SO THAT IMPACTS DEMAND AT LEAST IN THE SHORT RUN IN SOUTH CAROLINA AS WELL.

SO I THINK YOU'VE GOT TO LOOK AT IT IN BOTH DIRECTIONS, BUT GERMANY IS ESPECIALLY AN IMPORTANT PLAYER FOR SOUTH CAROLINA.

>> JOHN, THIS WHOLE IDEA THAT THE CAROLINAS-- AND THIS IS MY TERM, BUT THE CAROLINAS IS THIS OASIS BUBBLE, NEW SOUTH THING THAT WE'VE ENJOYED FOR SO LONG, BUT IS THE CAUSE AND EFFECT THE LEVERS GLOBALLY AFFECT US THAT MUCH?

>> ABSOLUTELY.

I THINK THAT THE ONE THING WE NEED TO REALIZE HERE ABOUT, PARTICULARLY GREAT BRITAIN, THAT'S ONE OF THE FEW TRADING PARTNERS THAT WE HAVE THAT WE RUN A TRADE SURPLUS WITH.

IF THEIR ECONOMY STARTS TO GO SOUTH, AND IT'S VERY LIKELY THEY'RE GOING TO HAVE A HARD WINTER IN THE U.K.

I THINK THAT'S WITHOUT QUESTION.

AND YOU KNOW, WITH ENERGY PRICES RISING AND THEY'RE GOING PROBABLY INTO A RECESSION, THAT MEANS THAT CONSUMERS ARE GOING TO STOP BUYING GOODS AND SERVICES.

THEY'RE GOING TO REDUCE THEIR PURCHASES.

THAT'S GOING TO AFFECT US BECAUSE AS I SAID, IT'S ONE OF THE FEW COUNTRIES THAT WE RUN A TRADE SURPLUS WITH.

CONSEQUENTIALLY, THEY'RE GOING TO BUY FEWER U.S. GOODS.

IT'S JUST THAT SIMPLE.

>> Chris: JOHN USED THE TERM HARD RECESSION.

COULD WE HAVE A HARD LANDING IN THE U.S.

IN ARE WE IN A RECESSION NOW?

ANYONE?

>> PROBABLY NOT IN A RECESSION RIGHT NOW.

I KNOW THAT EVERYBODY SCREAMS ABOUT, OH, THERE'S A DOWNTURN IN GDP.

THAT'S NOT THE WAY THE NATIONAL BUREAU OF ECONOMIC RESEARCH LOOKS AT IT.

IT'S A MUCH BROADER LOOK AND DESPITE THE FACT IT WE HAD TWO QUARTERS OF DOWNTURN THROUGH THE FIRST EIGHT MONTHS OF THIS YEAR, WE ADDED 3.5 MILLION JOBS TO THE LABOR MARKET.

IT'S HARD TO TALK ABOUT A RECESSION WHEN YOU'RE ADDING 200, 300, 400,000 JOBS A MONTH.

THAT DOESN'T MEAN THAT WE'RE NOT MAYBE HEADED FOR ONE, BUT WE'RE PROBABLY NOT IN ONE NOW.

>> Chris: I'M SORRY, JOHN.

FINISH YOUR THOUGHT.

APOLOGIES.

>> I WAS GOING TO JUMP IN TO SAY THAT WE COULD THINK OF IT AS A LAGGED RECESSION.

IN THE SENSE THAT IF INTEREST RATES CONTINUE TO GO UP AS WE KNOW THAT THEY ARE, THE FED HAS BEEN VERY CLEAR ABOUT THAT, THAT IS ALMOST INEVITABLY GOING TO LEAD TO AN INCREASE IN THE UNEMPLOYMENT RATE EVENTUALLY.

WE DON'T KNOW WHEN THAT IS GOING TO HAPPEN.

I THINK IF WE ZOOM OUT A LITTLE BIT AND THINK OF THIS AS A BROADER PULLBACK BEGINNING IN 2022 AND EXTENDING THROUGH EARLY 2023, THAT CAN BE A HELPFUL WAY TO LOOK AT IT.

BECAUSE A RISE IN THE UNEMPLOYMENT RATE, AGAIN, I THINK IS ALMOST INEVITABLE AT THIS POINT.

>> Chris: DR. ULRICH, CENTRAL BANK CHAIR, JEROME POWELL, YOUR BOSS IN EFFECT, WAS VERY POINTED WITH HIS COMMENTS.

WAS THAT SURPRISINGLY SHORT AND HE WAS TO THE POINT?

IT WAS-- DID THAT SURPRISE YOU?

>> I THINK BECAUSE I FEEL THE LEADER AND THAT INCLUDES THE BOARD OF GOVERNORS AND THE AND YOU THAT INCLUDES OUR PRESIDENT HAS BEEN TRANSPARENT THROUGH THIS PERIOD.

THERE'S BEEN A LOT MORE COMMUNICATION THAN MAYBE WE HAVE SEEN IN THE PAST WITH SOME FEDERAL RESERVE LEADERS AND I THINK WE ARE IN THIS VERY INTERESTING TIME PERIOD WHERE THEY'RE TRYING TO EDUCATE PEOPLE IN REAL TIME AS WELL, RIGHT?

BECAUSE YOU DO HAVE INFLATION LIKE WE HAVEN'T SEEN IN 40 PLUS YEARS, BUT AT THE SAME TIME, AS JOHN MENTIONED, WE HAVE THIS REALLY STRONG LABOR MARKET AND THERE IS KIND OF A BROAD MISUNDERSTANDING OF WHAT A RECESSION REALLY IS AND SO THERE'S THIS EDUCATION PIECE, TOO, THAT'S OUT THERE I TRYING TO LEVEL SET WITH PEOPLE ABOUT WHAT'S GOING ON AND WHAT THE DATA ARE SHOWING US AND QUITE FRANKLY, IT'S DIFFERENT THAN WHAT WE HAVE SEEN IN THE PAST.

WHILE THE DEFINITION OF A RECESSION IS NOT TWO CONSECUTIVE QUARTERS OF NEGATIVE GDP GROWTH, SINCE THE GREAT RECESSION, EVERY TIME WE HAD TWO NEGATIVE QUARTERS OF NEGATIVE GDP GROWTH, WE HAVE BEEN IN A RECESSION.

THIS IS A DIFFERENT TIME PERIOD AND IT'S BEEN DIFFERENT, QUITE FRANKLY, FOR THE PAST TWO AND A HALF YEARS, RIGHT, SO IT'S NO SURPRISE AT THIS POINT.

>> Chris: DR. HILL, I DON'T WANT TO LEAVE THE IDEA OF RECESSION QUITE YET.

WE'LL UNPACK THIS LANE ARE THING.

TO USE THE METAPHOR, WHEN IT COMES TO INTEREST RATES, INFLATION, ARE WE WHISTLING PAST THE GRAVEYARD?

ARE WE HOPING IF WE GET PAST IT, INTEREST RATES ARE GOING TO LEVEL OUT AND INFLATION'S GOING TO LEVEL OUT AND MAYBE FALL, OR IS THERE A REAL RISK IN THE BACK OF YOUR MIND MAYBE?

THAT THE BEAST IS NOT DONE.

>> SO I'M MORE CONCERNED MOSTLY ABOUT THE DEMAND FOR MONEY AND HOW THESE INTEREST RATES ARE AFFECTING THE DEMAND.

WHEN YOU FIRST RAISED THE INTEREST RATES THAT WERE THERE, THERE WASN'T THAT MUCH OF A REDUCTION IN THE DEMAND FOR FINANCING ALONG WITH THAT, AND I THINK FROM THE STANDPOINT OF HOW COMPANIES ARE NOW STARTING IT REACT THAT WE CAN NOW NO LONGER HAVE, LET'S SAY, LARGE BUILDING UTILITIES.

WE DON'T HAVE TO PAY THAT BECAUSE WE'RE MOVING OUT OF THE PANDEMIC AND INTO A PLACE WHERE WE CAN WORK FROM HOME.

SOME OF THE FINANCE PEOPLE ARE PRODUCTION AND GOODS AND OVERALL OPERATIONS, IT'S NOW CHANGING SO EVEN WITH THAT, I'M KIND OF THE STANDPOINT, I'M WAITING TO SEE WHAT THE REACTION IS GOING TO BE TO ALL OF THESE DIFFERENT CHANGES.

BECAUSE, I BELIEVE, CHAIRMAN POWELL HAS ALWAYS BEEN DIRECT WITH WHAT THEY'RE DOING.

THE FED IS NOW COMING OUT REALLY DIRECT AND IT'S EASY FOR US AS SPECULATORS TO REALLY SEE WHAT'S HAPPENING AND MAKE ADJUSTMENTS BASED ON THAT.

>> Chris: YOU'RE ALWAYS BEING SO PROFESSIONAL AND FORMALIZED, WHICH WE APPRECIATE, BUT IS ANYONE HERE-- >> LET ME ADD SOMETHING, CHRIS, ABOUT THIS.

I THINK TO BE A LITTLE LESS FORMALIZED, EVEN WE MAY NOT BE IN A RECESSION AS A NATION, RIGHT, LIKE IN A TRUE DEFINED RECESSION OR DEFINED BY THE NBR, THAT DOESN'T MEAN THAT WE'RE NOT HAVING SOME CRISES WITH IN THE COUNTRY.

THERE ARE PEOPLE WHO VERY MUCH FEEL LIKE THEY'RE IN A RECESSION RIGHT NOW BECAUSE INFLATION A SIGNIFICANT TAX ON THEIR EARNINGS, RIGHT?

THEY'RE GOING TO GAS PUMPS AND PRICES HAVE COME DOWN NOW.

BUT IT IS STILL HIGHER THAN IT WAS PREVIOUSLY.

FOOD PRICES ARE REALLY UP.

SO PEOPLE HAVE HAD A TAX ON THEIR LIFESTYLE, RIGHT, AND INFLATION.

ADDITIONALLY, HOUSING COSTS ARE GOING UP, RIGHT?

RENTS ARE GOING UP.

THE PRICE OF USED CARS ARE GOING UP, RIGHT?

ALL THESE THINGS ARE GOING UP.

IT'S THE PEOPLE, AND THERE ARE PEOPLE IN LOWER HOLDS, MIDDLE INCOME HOUSEHOLDS BECAUSE THE THINGS THAT THEY SPEND THEIR INCOME ON HAVE BECOME MUCH MORE EXPENSIVE.

WHILE IT'S IMPORTANT TO RECOGNIZE THAT WE MAY NOT SAY THAT THE U.S. IS IN AN OFFICIAL RECESSION, IT DOESN'T MEAN THAT THERE AREN'T RECESSIONARY IMPACTS THAT IMPACT HOUSEHOLDS, RIGHT, AND I THINK THERE IS A SIGNIFICANT AMOUNT OF STRESS OUT THERE.

>> WE KNOW AS WELL-- I'M SORRY, GO AHEAD.

PLEASE FINISH.

>> I WAS GOING TO SAY THAT I WOULD SAY THAT THE HOUSING MARK SET ALMOST CERTAINLY IN A RECESSION RIGHT NOW.

AT LEAST ON THE RESIDENTIAL SIDE, WHERE WE HAVE SEEN A SIGNIFICANT PULLBACK IN 2022 IN SALES.

CLOSER TO LEVELS THAT WE WERE EXPERIENCING IN 2018 AND 2019.

NOW PART OF THAT IS A PULLBACK TO LEVELS THAT ARE MORE SUSTAINABLE BECAUSE WE HAD SEEN SUCH A BUBBLE IN 2020 AND 2021 AS A RESULT OF MORE DEMAND AND MORE FINANCIAL RESOURCES FOR HOUSEHOLDS.

BUT RIGHT NOW, THERE'S BEEN A DRAMATIC PULLBACK.

I THINK ANYONE AND CERTAINLY ON THE RESIDENTIAL SIDE [ LOST AUDIO ] >> Chris: DID WE LOSE YOU?

WE LOST JOEY.

WE'LL GET JOEY BACK IN.

TRY TO LOG BACK IN.

>> I THINK WE NEED TO BE CAREFUL HERE.

I THINK THAT INFLATION HAS CAUSED HARDSHIP ON A NUMBER OF HOUSEHOLDS IN THIS COUNTRY.

I DON'T THINK THERE'S ANY QUESTION ABOUT THAT.

THERE'S A LARGE RISE THERE IN THAT RESPECT.

THAT'S NOT A RECESSIONARY ACTION.

YOU LOOK AT THE NBER, AND I HATE TO BE A STICKLER ABOUT THIS, BUT THEY HAVE DEFINED RECESSIONS FOR THE LAST 170 YEARS.

I THINK THEY'VE GOT A HANDLE ON THIS, OKAY.

THEY TALK ABOUT OVERALL DECLINES AND ECONOMIC ACTIVITY.

WE DON'T HAVE THAT, OKAY.

I THINK THERE'S A FURTHER POINT THAT-- NO ONE IS TALKING ABOUT THIS, ALL RIGHT, BUT THERE ARE TWO SOURCES OF ECONOMIC GROWTH THAT WE HAVE.

ONE IS PRODUCTIVITY INCREASES AND THE OTHER IS INCREASES IN IB LAKER FORCE, AND WE'VE BEEN PAYING A LOT OF ATTENTION TO THE LABOR FORCE.

WE'RE PAYING ATTENTION TO LABOR FORCE PARTICIPATION RATE.

LAST MONTH IT WENT UP FOR THE FIRST TIME IN QUITE A WHILE.

THAT WAS A GOOD THING.

THAT'S WHY THE UNEMPLOYMENT RATE WENT UP A LITTLE BIT.

WHAT WE HAVEN'T BEEN PAYING ATTENTION AND I WATCHED POWELL YESTERDAY AND I WATCH POWELL EVERY TIME HE SHOWS UP.

WHAT HE'S NOT TALKING ABOUT IS THE PRODUCTIVITY ISSUE WE ARE HAVING.

FIRST QUARTER PRODUCTIVITY DECLINED 7%.

SECOND QUARTER DECLINED BY.5.

YOU HAVE TO GO BACK TO 1947 BEFORE YOU SEE A SINGLE QUARTER DECLINE LIKE THAT.

WE HAVE NEVER HAVE SEEN TWO SUCCESSIVE QUARTERS DECLINE AT THAT LEVEL BEFORE.

WE HAVE AN ISSUE ON THE PRODUCTIVITY SIDE THAT HAS GONE UNDER THE RADAR WHICH IS INSTRUMENTAL TO WHY WE HAVE SEEN GDP DECLINE.

IT'S NOT SO MUCH THAT WE HAD A LACK OF-- WE HAD A LACK OF PRODUCTIVITY.

THAT'S WHAT IS GENERATING THAT.

>> NOT TO PUT YOU IN A DEFENSIVE POSITION ABOUT FED PROCESSES.

I'M SURE THE FED STILL FACTORS PRODUCTIVITY.

JOHN DESCRIBED IT.

IS THAT AN ISSUE?

>> ABSOLUTELY DO LOOK AT DATA ON PRODUCTIVITY.

THERE ARE SOME INTERESTING THINGS GOING ON IN THE MEASUREMENT OF GDP AND LOOKING AT HOW-- GDP IS USED TO THEN CALCULATE PRODUCTIVITY AND SO THERE IS SOME INTERESTING DATA THINGS THAT I WON'T GO INTO MUCH HERE BECAUSE IT MIGHT PUT ALL THE VIEWERS TO SLEEP.

THERE ARE SOME INTERESTING DATA THING GOING ON IN THE MEASUREMENT OF GDP VERSUS GROSS NATIONAL INCOME AND THERE'S DISCREPANCIES THAT WE DON'T TYPICALLY SEE.

THAT MAY BE WHY YOU DON'T SEE THE FED SPEAKING AS PUBLICLY ABOUT PRODUCTIVITY RIGHT NOW.

I AGREE WITH JOHN THAT THERE ARE OTHER THINGS GOING ON RELATED TO LABOR MARKETS AND PRODUCTIVITY THAT ARE EXTRAORDINARILY IMPORTANT.

>> I UNDERSTAND THAT THERE ARE ISSUES ABOUT DATA COLLECTION AND STUFF.

11% IN TWO QUARTERS.

>> I AGREE.

I AGREE.

>> THAT'S REAL.

>> YES, I AGREE WITH YOU.

>> Chris: I WISH WE HAD MORE TIME TO UNPACK IT.

I DON'T THINK YOU'RE WRONG.

YOU TALKED ABOUT THAT IN PAST.

IN THE INTEREST OF TIME, WE HAVE MORE TO SHOEHORN IN THE LAST 10 MINUTES.

NICHOLAS, JOEY, WEIGH IN ON THIS.

AND I KNOW ORANGEBURG IS NOT A SUPER URBAN CORE, BUT IT IS A CITY AND IT IS IN CENTRAL SOUTH CAROLINA GOING MORE TOWARD THE LOWCOUNTRY.

WHEN YOU LOOK AT CHARLOTTE, WHEN YOU LOOK AT CHARLESTON, WHEN YOU LOOK AT ASHEVILLE, IN THE TRIANGLE AND YOU SEE THESE URBAN CORES THAT ARE LITERALLY HUMMING AND VIBRATING FROM ACTIVITY, BUT NOW THERE SEEMS TO BE A TURN, COMMERCIAL REAL ESTATE EXECUTIVE SAID THAT IN CORRIDORS LIKE CHARLOTTE, THE VACANCY RATE IS APPROACHING 20%.

THEN HE WENT ON TO SAY BUT THE WHISPER VACANCY RATE IS MORE LIKE 40%.

HOW DO YOU SQUARE THAT?

>> SO JOEY, LET ME JUMP IN REAL QUICK.

WHAT WE'RE HEARING WHEN WE TALK WITH PUBLIC RELATIONS AND THE BOTTOM LINE ASSOCIATED WITH THE COMMERCIAL REAL ESTATE AND HOLDING ALL OF THESE DIFFERENT TYPES OF BUILDINGS AND PROPERTY.

NOW THAT WE'RE MOVING IN A PLACE WHERE WE CAN BE EFFECTIVE FROM, WITHING AT HOME AND THEY'RE MAKING THE DIFFICULT CHOICE IS TO HAVE THE LARGE MORTGAGE ON THEIR BOOKS THAT THEY CAN KIND OF GET RID OF AND SAVE THAT MONEY TO HELP WITH MANY SO OF THE LODGES THAT WILL BE EXPECTED DUE TO THE FACT OF THESE UNCERTAINTIES.

IT'S JUST LIKE WE'RE UNCERTAIN ABOUT WHAT'S GOING TO HAPPEN, THEY ARE TOO.

THEY'RE STARTING TO BE IN THE PROCESS OF PULLING BACK.

>> I AGREE WITH THAT.

I THINK THEY'RE WAITING TO SEE, IN MANY CASES, HOW THIS NEW PROFESSIONAL -- HOW THESE NEW NORMS EVOLVE.

THERE ARE MORE ADVANTAGES TO PROVIDING WORKER FLEXIBILITY PARTICULARLY WHEN WE DO HAVE A SITUATION WHERE THERE IS A LABOR SHORTAGE AND WE'RE TRYING TO PROVIDE COMPANIES, IN GENERAL, ARE TRYING TO PROVIDE RESOURCES AND WAYS TO ATTRACT EMPLOYEES.

SO THAT'S A FACTOR.

BUT ALSO WHETHER OR NOT COMING BACK TO THE OFFICE IS MORE RELEVANT GOING FORWARD AND WHETHER THAT'S GOING TO CONTINUE TO BE IMPORTANT FOR NET WORKING AND ALL THE SECONDARY BENEFITS THAT BEING IN PERSON PROVIDES AND THE IMPORTANCE OF THAT TYPE OF CONNECTION.

SO I THINK THERE'S-- WE'RE STILL IN A TRANSITION PHASE RIGHT NOW, AND WE DON'T KNOW WHAT WE'RE GOING TO BE SEEING.

IT'S JUST A PERIOD OF HIGH UNCERTAINTY.

>> THE OTHER THING I WOULD ADD HERE, CHRIS, IS THAT IN THE MORE URBAN CORES, WE TALK TO FOLKS ALL ACROSS BOTH STATES, BUT IN PLACES LIKE UPTOWN CHARLOTTE AND DOWNTOWN RALEIGH, THEY'RE HAVING A VERY HARD TIME GETTING POOH EMTO COME BACK.

THAT'S JUST THE REALITY OF IT.

A LOT OF THESE COMPANIES HAVE POLICIES WHERE THEY'RE SAYING YOU NEED TO BE IN THE OFFICE TWO, THREE, FOUR, FIVE DAYS A WEEK AND THEIR EMPLOYEES ARE NOT DOING IT AT THE LEVELS THAT THEY EXPECT THEM TO.

I THINK THERE'S THIS HUGE ISSUE GOING ON RIGHT NOW WITH THE TIGHT LABOR MARKET, TO YOU FORCE PEOPLE TO DO THIS AND POTENTIALLY LOSE A LOT OF EMPLOYEES, OR DO YOU KIND OF, LIKE JOEY SAID, WAIT AND SEE HOW THIS SETTLES OUT?

I THINK THERE'S A TREMENDOUS AMOUNT OF UNCERTAINTY.

THE TOWERS IN UPTOWN CHARLOTTE WHERE I WORK ARE STILL PRETTY EMPTY AND IF YOU GO TO A PLACE LIKE COLUMBIA OR ORANGEBURG, THEY'VE BEEN ABLE TO GET THEIR PEOPLE BACK BUT IN THE BIGGER CORRIDORS, IT'S MORE DIFFICULT.

>> REAL QUICK, ON TOP OF THAT, ONE OF THE ISSUES THAT WE GET WITH THE DIGITAL DIVIDE BECAUSE WE'RE WORKING FROM HOME, AT LEAST A LOT OF INEQUALITY AND THE INEQUITY FOR RURAL SOUTH CAROLINIANS WHO DON'T HAVE ACCESS TO BROADBAND, SO THAT'S ONE OF THE THINGS THAT IF WE PUSH THAT FOR THEM TO BE ABLE TO HAVE WORK AND REMOTE WORK IN THESE AREAS.

AND SOMETIMES IT SK AS THOSE MORE SO IN RURAL AREAS THAN THOSE IN THE CONCENTRATED URBAN MARKETS.

>> ONE ARE MO THING ON THIS.

I THINK WHAT LAURA TALKED ABOUT IS INTERESTING.

I THINK THAT THE CEOs OF THESE COMPANIES ARE TART STARTING TO REALIZE THAT THE IDEA THAT THE PRODUCTIVITY LEVELS ARE THE SAME FOR VIRTUAL WORK AS IN-PERSON WORK, I THINK THERE'S A REALIZATION THAT'S NOT TRUE ANYMORE.

WE WERE LED INTO A FALSE SENSE OF SECURITY IN THE EARLY PERIOD WHEN COVID WAS RAMPANT FOR THE FIRST YEAR IN 2020.

PEOPLE HAD NOTHING ELSE TO DO.

THERE WERE NO OPPORTUNITY OTHER COSTS.

YOU CAN GO OUT TO THE MOVIES AND GO OUT TO LUNCH AND THERE'S A WHOLE LOT OF THINGS YOU CAN DO.

AS ELON MUSK SUGGESTED, PRETEND WORK, AND I THINK THAT WE SEE JAMI DIAMOND AND GOLDMAN SACHS AND B OF A, THEY'RE STARTING TO PUSH HARD FOR PEOPLE TO GO BACK TO WORK.

>> Chris: LET ME GIVE A QUICK FOLLOW-UP ON THAT.

THIS IS MY TERM.

GAME OF CHICKEN BETWEEN THE WORKER AND THE COMPANY, IS THAT WHAT IT IS?

>> THAT'S A GOOD DESCRIPTION.

I THINK RIGHT NOW WITH LABOR MARKETS AS TIGHT AS THEY ARE, I THINK THE WORKERS HAVE THE UPPER HAND AND TO SOME EXTENT ARE DICTATING.

IF THE FED CONTINUES ON RAISING RATES AND WE SEE A 4% FEDERAL FUNDS TARGET BY THE END OF THIS YEAR, YOU KNOW, THINGS-- THE HOPE OF A SOFT LANDING MAY GO OUT THE WINDOW, AND WHEN THEY START TO SEE THE UNEMPLOYMENT RATE RISE AND IT'S UP AROUND 5% AND THE BALANCE BETWEEN EMPLOYER AND EMPLOYEE MAY CHANGE AND YOU MAY START TO SEE A DIFFERENT ENVIRONMENT.

I DON'T THINK WE'RE GOING TO GO BACK TO 100% IN THE OFFICE, BUT WE WILL GO BACK TO A MORE HYBRID SYSTEM.

>> Chris: SOMEONE WAS GOING TO SAY SOMETHING.

I HEARD SOMEBODY AGREEING.

WAS THAT YOU, LAURA?

>> IT WAS ME.

I COMPLETELY AHE FRA.

IT'S INTERESTING BECAUSE I WILL HEAR SOME OF THE LEADERS STATE THEIR POLICY AND I TALK TO PEOPLE WHO WORK INSIDE THE COMPANY, AND YEAH, WE HAVEN'T BEEN IN THIS WEEK.

I COME IN ONE DAY A WEEK AND WE'RE SUPPOSED TO BE IN FOUR DAYS A WEEK.

IT IS THIS CHICKEN SITUATION, AS YOU SAY, CHRIS.

I AGREE.

THE LABOR SUPPLY BECAUSE OF LIMITED DEMOGRAPHICS BUT LABOR DEMAND IS WHERE WE CAN SEE CHANGES.

AS THE DEMAND FOR LABOR GOES DOWN, YOU CAN SEE THE POWER DYNAMICS SHIFT THERE.

>> Chris: THREE OF YOUR DISTINGUISHED PANELISTS ARE ACADEMICS.

YOU WORK FOR EDUCATIONAL INSTITUTIONS AND THIS SAY K-12 QUESTION, BUT MAYBE NOT.

IN LAST THREE AND A HALF MINUTES, I WANT TO UNPACK THAT WE'RE BACK THROUGH SCHOOL, K THROUGH 12, HIGHER ED, ET CETERA.

THERE'S A LOT OF TALK AND A LOT OF HAND WRINGING QUITE FRANKLY ABOUT THE LOST EDUCATIONAL ATTAINMENT.

DOES THAT TRANSLATE INTO SOME ECONOMIC LIABILITY OR ECONOMIC RISK IN THE NEAR TERM, OR EVEN IN THE INTERMEDIATE TERM?

ANYONE?

>> I'LL GO AHEAD AND THERE HAVE BEEN SOME ESTIMATES THAT HAVE BEEN MADE BY THINK TANKS THAT SUGGEST DEPENDING ON THE YEAR AND THE SCHOOL THAT THE KIDS ARE IN, IT CAN RANGE ANYWHERE FROM ONE YEAR TO MAKE THAT UP TO FIVE YEARS TO MAKE THAT UP FOR SOME OF THE OTHER KIDS.

THAT'S REAL.

IT'S BOTH EDUCATIONAL IN TERMS OF SUBJECT MATTER, READING AND WRITING AND ARITHMETIC, BUT IT'S ALSO SOCIAL AS WELL, AND SO A NUMBER OF THESE THINGS HAVE COMBINED TO AFFECT THESE KIDS.

I'M NOT SURE AT THIS POINT IN TIME, AND THIS IS KIND OF LIKE MY PRODUCTIVITY ISSUE.

NOBODY IS TALKING ABOUT IT.

I'M NOT SURE WE'RE ACTUALLY ACTION >> NOING THAT THERE HAVE BEEN ACADEMIC LOSSES, BUT WE'RE NOT REALLY ADDRESSING, OKAY, HOW DO WE FIX THIS?

WHAT DO WE DO?

HOW DO WE SPEND MONEY TO GET THIS ACCOMPLISHED?

>> THIS IS ONE OF MY AREAS OF RESEARCH, AND I COMPLETELY AGREE WITH WHAT JOHN JUST SAID.

THERE'S A LOT OF TALK ABOUT IT BUT I'M SEEING VERY FEW SCHOOL DISTRICTS ACTUALLY TAKE WHAT I BELIEVE ARE EXTREME ACTIONS WHICH IS WHAT I THINK IT'S GOING TO TAKE TO MAKE ANY DIFFERENCE.

>> Chris: NOT TO PICK ON YOU, BUT DO THEY HAVE THE BANDWIDTH TO TACKLE THIS?

THEY'RE TRYING TO GET TEACHERS IN THE CLASS.

>> I AGREE.

BUT THEY GOT A TREMENDOUS OF FUNDING THROUGH THE CARES ACT.

IT'S IMPORTANT TO RECOGNIZE THAT STATE AND LOCAL GOVERNMENTS, ALMOST ALL OF THEM ARE SITTING ON LARGE TAX SURPLUSES AND MY ANSWER TO THAT IS THEY HAVE A ONCE IN A LIFETIME OPPORTUNITY TO DO IT RIGHT.

I DON'T KNOW-- BUT HERE'S THE THING.

EDUCATORS AND I USED TO BE A PUBLIC EDUCATOR, AND I CAN SAY THAT WHERE THE OTHERS MAY NOT BE ABLE TO SAY IT.

AS EDUCATORS, YOU'RE NOT USED TO-- YOU'RE USED TO THINKING IN A DEFICIT MINDSET.

LIKE WE NEVER HAVE ENOUGH MONEY TO DO WHAT WE WANT TO DO.

ALL OF A SUDDEN THESE SCHOOL DISTRICTS AND LOCAL GOVERNMENTS HAVE MILLIONS OF DOLLARS PUT IN THEIR LAPS.

THEY'RE NOT WELL SUITED TO DEAL WITH THAT.

>> Chris: WE HAVE A MINUTE LEFT.

NICHOLAS, DO YOU WANT TO WEIGH IN ON THAT?

>> YEAH.

BUT REAL BRIEFLY, I THINK EVERYTHING THAT IS DISCUSSED IS TRUE AND IT'S NOT ABOUT THE CAPACITY.

IT'S ABOUT THE WILL.

I THINK THAT'S ALWAYS THE CASE.

IT'S WHETHER OR NOT THESE DISTRICTS AS WELLS AT THE GOVERNMENT HAVE THE WILL TO PUT FORTH WHAT THEY HAVE DONE WITH K THROUGH 12 EDUCATION.

I CAN'T STRESS ENOUGH THAT DURING THE PANDEMIC WHAT IT EXPOSES IS INEQUITY IN EDUCATION SYSTEM.

AND A LOT OF DISTRICTS THAT DID NOT HAVE THIS VIRTUAL OPTION, THIS BROADBAND OPTION THAT IMPACTED MINORITY DISTRICTS A LOT, THEY ARE SEEING EVEN A LARGER GAP IF THE ATTAINMENT THAT'S THERE.

NOW THAT WE HAVE THESE RESOURCES, WE CAN ACTUALLY TRY TO WORK TO TRY TO SOLVE THE PROBLEM.

I DON'T KNOW IF WE HAVE THE WILL TO.

THAT'S THE ISSUE.

>> Chris: DR. HILL, THAT'S THE LAST WORD.

DR. HILL, THANKS FOR JOINING US.

I KNOW WHEN YOU FIRST SIGNED UP FOR THIS, YOU MAY NOT KNOW IT WAS LIKE A RIDE AT CAROWINDS.

>> THANK YOU FOR HAVING ME.

>> Chris: COME BACK JOEY.

BEST TO OUR FRIENDS DOWN THERE.

JOHN, AS ALWAYS, DR. ULRICH, THANK YOU AS WELL.

UNTIL NEXT WEEK, I'M CHRIS WILLIAM.

WE HOPE ALL YOUR BUSINESS IS GOOD AND YOUR WEEKEND IS, TOO.

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