Wow, time flies! The past six months of 2023 have gone by so fast, as Epcon has been hard at work with major projects that carried forward from 2022. Now these projects are in the final stages of completion. In addition, Epcon was awarded many sizeable projects within the last month or two that will keep our shop and all personnel very busy for the rest of the year.
In regard to the economy, stubborn inflation is somewhat tamed but still not to the target level of what the Federal Reserve Bank would like to see between 2 – 3%. In the near term, the inflation shall remain in the range of about 4%. The reason for the higher inflation rate is the labor shortage, which has created a high labor demand and higher wages. Higher wages are always a catalyst for higher inflation.
The labor market remains very tight all over the country, also, it is true for Europe as well. Labor shortage is a result of COVID; a certain segment of the labor force is still not ready to go back to work. The problem of labor shortage is also exacerbated by the U.S. Government immigration policy. The labor shortage also greatly affects supply chain issues. However, in due time, it should resolve itself and the basic principle of supply and demand shall prevail.
Last quarter, the economists and Wall Street were concerned about the recession in the 3rd or 4th quarter of this year. Now the indications show that the U.S. may not have a recession this year, whereas Europe, and in particular Germany, are in recession. The strange thing is that several European banks have increased the core interest rates to fight inflation. Now, Europe has a high interest rate, higher than expected inflation, and a recession at the same time.
On the contrary, the economy has slowed down considerably in China, with high unemployment rates close to 20%. With particularly high rates affecting new graduates and new job seekers. In response, China is taking every action to stimulate the economy by lowering the interest rate, whereas the U.S. and European banks have been raising rates to combat the high inflation.
Meanwhile the outlook for the U.S. economy has changed in the last few weeks as Artificial Intelligence has been the catalyst for the stock market rise. As the entire world is trying to grasp the impact of AI and understand the “good, bad and ugly” aspects of the new technology. I remain optimistic that the positive shall overwhelm the negative effects of AI.
Thank you for your continued interest in Epcon’s business outlook. We look forward to a strong second half of the year, as we continue to work very hard to fill up our pipeline of orders.
