Productivity growth, assisted by technology, could make wage gains tolerable for companies and sustainable for workers.

Hurricane Ian was one of the worst national disasters in U.S. history. Estimates are still being tallied, but it idled a large portion of Florida’s trillion dollar economy and a swath of the Southeastern seaboard.

Rebuilding will be incomplete and take time to ramp up, given damages to infrastructure. Most of the boost to economic activity is expected to occur in the first half of 2023. As we saw in the wake of Hurricane Katrina, many will leave to work and live elsewhere.

Hurricanes are made up of clusters of thunderstorms that combine to become more powerful and devastating than any one storm. That is a useful metaphor for where we are. Geopolitical and economic storm clouds were gathering well before Ian came ashore.

This edition of Economic Compass takes a closer look at three key themes:

1)      The risk of a global recession;

2)      The unique role the Federal Reserve will play in determining that outlook; and

3)      The risk of chronic scarcities.

We are moving from a world of abundance, in which what seemed an endless supply of cheap labor and cheap goods from abroad is being supplanted by a world of scarcity. That could leave us more prone to in­flation and rate hikes on the other side of the recession.

The only silver lining to those clouds is technological innovation. That could help ease the transition away from fossil fuels, secure the energy grid and enable wage gains to outpace instead of chase inflation.

For more information, download the full reports below.