Bank of America CEO Brian Moynihan, seen here in a file photo, was among the speakers at the Charlotte Regional Business Alliance’s annual outlook event on Tuesday.
Businesses in Charlotte and beyond will face a familiar list of economic obstacles in 2023, among them higher prices, crises in Europe and a rapidly evolving workplace.
That’s according to CEOs of three of the region’s largest companies: Marvin Ellison of Lowe’s, Darius Adamczyk of Honeywell, and Brian Moynihan of Bank of America.
The chief executives spoke on a panel at the Charlotte Regional Business Alliance’s Annual Outlook Event Tuesday afternoon at the Westin hotel in uptown. Here are four key questions they answered about the year to come.
What economic challenges lie ahead in 2023?
Most of the challenges the CEOs described as looming in the new year have already plagued the economy for months.
Inflation remains one of their top concerns, as do labor shortages and supply chain snags that are affecting many different types of businesses.
“I’m just kind of looking for a normal year,” Adamczyk said. “We haven’t really had one since 2019. It seems like it’s just one crisis after another.”
Moynihan pointed to how the Federal Reserve has moved aggressively to respond to inflation, but if interest rates remain high for a longer period, it could pose a more profound challenge for firms. The central bank is expected to approve a seventh consecutive interest rate hike on Wednesday.
“There’s nobody under the age of 40 in business who’s worked with an interest rate environment (like this),” Moynihan said.
“For a lot of businesses, it is different,” Adamczyk added. “This is not something that you’ve had to worry about for decades.”
Who will be hit the hardest?
Today’s combination of economic challenges is impacting different businesses in different ways, Ellison said. That’s unlike crises in recent history such as the Great Recession, he said, which represented a uniformly severe hit across industries.
For example: despite a slowing U.S. housing market, Lowe’s has seen a “tailwind” in its retail sales, he said. As U.S. consumers shy away from buying a new place to live, they’re opting to spend on home improvement projects and enhance their current space instead.
“Most of us still see our homes as a rather valued asset, so our business is still rather robust,” Ellison said. “Yes, this is a tough macro(economic) environment… But in this space, we’re very fortunate in that our retail sector still has a bit of a tailwind.”
At electronics manufacturer Honeywell, the company’s e-commerce sector has slowed, while aerospace business has soared, Adamczyk said.
“That’s been on fire,” he said of the aerospace industry. “Consumers came back (to air travel) faster than anyone could have anticipated.”
The severity of potential economic distress in 2023 will also vary by geography, Adamczyk said. Challenges may be more profound in Europe, which has faced record increases in the gas prices and a growing energy crisis complicated by conflict in Ukraine.
Is work from home here to stay?
In the aftermath of the COVID pandemic, many Charlotte firms have continued to allow their employees to work from home at least part of the time. That includes Bank of America and Honeywell, which have allowed many employees to work remotely up to two days a week.
“I think three days a week (in the office) is reasonable,” Adamczyk said. “I want to maintain some level of flexibility, but we also want to get back to some level of being collegial.”
Neither Adamczyk nor Moynihan said their company’s workplace shifts were permanent,
“I think we’re all still learning about the right way to do this,” Moynihan said. “We’ll see how (our plan) plays out over time.”
What are some other predictions for 2023?
Overall, economic challenges will likely make next year tougher than the last, Adamczyk said.
“I don’t think it’s gonna be as good as it was in 2022. Savings rates are coming down, and have been coming down… Inflation is outpacing wage increases. We have to contain it,” he said. “But I don’t see a meltdown. Far from it.”
Ellison agreed that another crisis was unlikely. “I don’t think we’re going to have a massive economic shock.”
Regardless of looming threats, Moynihan stressed that the U.S. economy remains uniquely resilient.
“The rumors of America having a demise are greatly over-exaggerated,” he said. “We’ll still be talking about inflation this time next year… But we’ll also still be talking about how America is a better place to be than in any place in these times.”
