Woodward on Washington: An Economic, Public Policy and Political Outlook

September 28, 2022 | Webinar

In this special edition of Wednesdays with Woodward, we turned the tables on our host, Joan Woodward. She’s an award-winning economist, analyst and public speaker. Before joining the Travelers Institute, Joan served on Capitol Hill for 12 years, as Deputy Chief of Staff for the U.S. Senate Finance Committee working for Chairman Bill Roth, where she was instrumental in creating the Roth IRA. She also was the Chief Economist for the Senate Governmental Affairs Committee and the U.S. House Budget Committee under Chairman John Kasich. Following her time in the public sector, she went on to become the founding Executive Director of the Global Markets Institute at Goldman Sachs. Joan shared her insights on Washington and her outlook on the American economy, public policy and politics.

Conditions constantly change, but on September 28, 2022, this was Joan’s outlook in her Woodward on Washington presentation. 

ON THE ECONOMY: 

We may have hit peak inflation. “Before COVID-19, we hadn’t had inflation in many, many years, so this is all new to us,” she noted, citing wage gains, labor shortages, supply chain issues and geopolitical risks among the factors contributing to inflation rates. She is “hopeful that the Fed can move us in the right direction” and sees plans to raise the federal funds rate an “unprecedented” 11 times by the end of 2023 as a “necessary” strategy to ultimately “help inflation come down.” 

Unemployment rates are a “bright spot.” After dramatic increases in unemployment during the pandemic, “we’re back to full employment,” she assured. “A lot of people are hiring, and it’s not just the service sector, it’s also manufacturers,” she said, noting that another upside to the falling unemployment rate is staving off “stagflation.” She explained that stagflation, which occurs when rising inflation and unemployment rates coincide with falling economic growth, would be a much more stubborn situation to get out of than inflation alone. 

There is a disconnect between Wall Street and Main Street. While much of the nation has felt the crush of inflation and higher interest rates, over the past few years Joan has observed a troubling disconnect: “Our faith in institutions got rattled during COVID-19 … Wall Street was on fire while Main Street was really suffering.” 

Keep an eye on the consumer confidence Index. “Consumer spending really fuels economic growth,” she explained. “We’re a nation of spenders, so consumer confidence in the marketplace – that’s critically important.” 

ON WASHINGTON POLITICS:  

Look to the past to predict the future. From Woodrow Wilson in 1916 to Barack Obama in 2012, “with the exception of Calvin Coolidge in 1924, all two-term presidents had no recession in the last two years of their first term,” she observed. Given that, Woodward said that whether the U.S. enters into a recession in 2023 will be a key factor to watch in the 2024 U.S. presidential elections. 

Immigration may return as a pressing election issue. While immigration was the second most important issue going into the 2016 U.S. presidential race, it was knocked out of the top 10 leading up to the 2022 U.S. midterm elections. 

Presented by the Travelers Institute, the MetroHartford Alliance, the Darla Moore School of Business and the American Property Casualty Insurance Association.