At HIMSS23, Mark Zandi, Chief Economist and Co-Founder of Moody’s Analytics, discussed the possibility of an economic recession. He noted that while there are significant risks, such as inflation and the potential for failing to increase the debt ceiling, the recession is avoidable. Zandi identified labor costs as a significant challenge facing the healthcare industry and discussed the potential of AI to increase productivity growth. He emphasized that a strong and healthy healthcare sector is vital to the country’s long-term fiscal health and a healthy economy.
Mark Zandi, the Chief Economist and Co-Founder of Moody’s Analytics spoke at the HIMSS23 conference and addressed the widespread concern regarding the possibility of an economic recession. Zandi said that he has never witnessed as many individuals express such pessimism about the state of the economy in his more than 30 years of experience working as a professional economist. Notwithstanding his concerns, he is confident that a complete economic downturn for the nation can be avoided.
Zandi acknowledged that, when economists think about the future of the economy, they often look at history to identify patterns. In the past, when the economy struggled with high inflation, and the Federal Reserve raised interest rates aggressively to combat that inflation, a recession often followed. However, he noted that there have also been cases in which the country has navigated through without an agree-downturn.
Zandi emphasized that while “recession risks are high,” he thinks that “recession is avoidable.”
He pointed out that inflation is the primary challenge that the country currently faces, with the average American household spending around $350 more a month to buy the same goods and services they purchased a year ago. He expects inflation to start moderating soon, but there are still some potential risks. Zandi noted that healthcare has been a significant factor in containing inflation. The cost of medical care services, medical care commodities, pharmaceuticals, medical equipment, and supplies relative to overall prices has remained modest, and demand has reduced significantly during the pandemic, causing prices to grow more slowly than overall inflation.
However, Zandi also raised concerns regarding two potential risks. The first is the banking crisis, which caused a lot of concern among depositors and resulted in a bank run. The good news is that the crisis seems to be over, and the government has taken significant steps to resolve the issue. The second is the potential for failing to increase the debt ceiling. Zandi noted that lawmakers will likely agree to increase the limit, but the vexed environment in Washington, D.C., may lead to increasing drama, angst, and volatility in the financial markets.
Zandi listed labour costs as one of the biggest problems facing the healthcare sector. Significant demographic difficulties are present in the nation, and the pandemic has made them worse. Significant demographic problems exist in the nation, and the pandemic has made them worse. The country has always relied significantly on immigrants, both skilled and unskilled, with approximately a million coming each year. Immigration is the other group that is crucial to the sector. However, due to shifts in policy and politics, immigration has been impaired, and labor conditions are expected to continue to be tight for the foreseeable future. The healthcare sector is arguably the most labor-intensive industry in the economy, and tighter labor conditions are putting significant pressure on margins. Raising productivity and the introduction of new technologies, like AI and machine learning, are essential opportunities to increase productivity growth.
Zandi noted that AI is a “game changer” for healthcare and the wider economy. However, he also acknowledged that there are challenges with the “black box issue,” where AI produces decisions and relationships that are difficult to understand. Despite this challenge, Zandi believes that AI presents an enormous opportunity to improve productivity growth, particularly in information-intensive industries like healthcare. Ultimately, Zandi emphasized that the healthcare sector is critical to the country’s long-term fiscal health, and a strong, healthy healthcare sector is essential to the economy’s overall strength and health.
