Business Update - Weekly Digest (October 20, 2021)

The pandemic may change business travel as we know it forever. The Global Business Travel Association reported a nearly 90% drop in business travel last spring, as businesses were forced to conduct business via Zoom. While travel is increasing compared to a year ago, it is still sharply down from pre-pandemic levels. Post-pandemic, virtual business meetings may continue to be the norm. Travelers who are willing to venture out may be able to reap substantial savings.

TAX MATTERS

As a means to fund the Biden administration’s ambitious infrastructure and social policy bill, one proposal is to require banks to report data to the IRS for accounts with total annual deposits or withdrawals worth more than $600. The intention behind this proposal is to identify accounts with large discrepancies between bank activity and income reported to the IRS to crack down on taxpayers who are not paying their full tax obligation. If enacted, this proposal could bring in as much as $460 billion in additional revenue over a decade. Outcry from banks and their customers is pressuring the administration to scale back the proposal and raise the reporting threshold to $10,000. Many are concerned about the invasion of privacy and the merit of providing additional data to the IRS, which already cannot keep up with its current obligations.

THE GREAT REASSESSMENT

It’s not just younger people who are leaving their jobs in record numbers, but mid-career employees with five to 15 years of experience are also leaving at a fast clip. Retention efforts that apply the same pre-pandemic strategies that used to work well as a one-size-fits-all approach aren’t working anymore. A tailored response that seeks to remedy the reasons why an individual is considering leaving can help reverse the tide of departures.

Since the pandemic began, 4.3 million fewer people are working, while employers struggle to fill 10 million job openings and satisfy consumer demand. Women, workers without college degrees, and workers in low-paying jobs are leaving in the highest numbers. Some economists fear that this may become a long-term trend that won’t reverse for several years, if ever. 

ECONOMY

Nearly 40% of U.S. households faced serious financial challenges during the pandemic, according to a recent survey. Of those who earn less than $50,000 a year, nearly 60% report serious financial challenges, and 30% have depleted all their savings. However, the survey also found that people and businesses that were already doing well before the pandemic have had fewer problems, with 49% reporting no change, 32% reporting that their situation was worse, and 20% reporting improvements in their financial situation.

Pandemic-related shortages in labor and materials are causing the highest rate of inflation seen in the U.S. in over a decade. The consumer-price index rose by 5.4% in September from its level a year before. Rising prices for food, energy, and housing are expected to keep inflation higher than normal through the first quarter of 2022.