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Coming out of a global pandemic, the inflation rate in the United States is at a staggering 8.2% and energy and health care costs are rising. The current economic climate has many employers questioning what will happen in the coming months and years.

Steve Rick, director, and chief economist at CUNA Mutual Group gave a snapshot of the current state of the economy at The Alliance’s 2022 Fall Symposium and Annual Event and predicted what could happen in the coming years.

Will the US Economy Go into a Recession?

While 2021 saw a booming 5.7% growth in real gross domestic product (GDP), there has only been 1% growth in 2022. Although negative economic growth is a necessary factor for a recession, negative GDP growth alone does not indicate a recession. Job losses and a decline in personal income and retail sales must accompany negative GDP growth to be considered a recession. We are currently not seeing this with a near record-low 3% unemployment rate. Goods are still being demanded and produced, just at a lower rate than in 2021.  

Rick predicts a “growth recession” over the next year, meaning the economy will still be growing, but below the standard 2% growth baseline. He foresees a modest 1.5% growth for 2023, returning to the 2% baseline in 2024.

What Causes Inflation?

Rick described inflation as, “too many dollars chasing too few goods.” One factor contributing to the current inflation levels is the extra money introduced into the economy via stimulus checks meant to support Americans during the pandemic. Low interest rates on loans over the last few years further increased the money supply. Finally, supply chain and production issues in 2020 made accessing and buying goods, like cars, more difficult. Combined, the result was more money and too few available goods, which drove prices up.

Another significant factor for inflation is pent up demand for services. Over the last two years, people did not travel or purchase services as frequently. They are now seeking out services and travelling, which is increasing demand and raising prices. Higher prices started with goods and are now reflected in services in part because of rising labor costs. Increasing prices for energy, commodities, and health care are also contributing to the high inflation level.

Will Inflation Decrease?

The current inflation rate is the fastest-rising inflation in over 40 years. An 8.2% inflation rate means everything Americans are purchasing, from groceries to gasoline, is 8.2% more expensive than it was a year ago. In the month of August alone, health care prices rose 1% outpacing every other industry except energy. If that trend continued, it would mean a 12% annual increase in health care costs. Currently, the year-over-year price for health care is up 6.5%.

The most significant price in an economy is the price of money. The price of money translates to interest rates; when interest rates are low, money goes farther. E-commerce, globalization, and increasing manufacturing productivity are also powerful forces for deflation.

At the beginning of 2022, the federal interest rate was 0%. It has since increased abruptly with the Federal Reserve raising interest rates to 3.1% to restrain the economy. Rick predicts interest rates reaching 4.6% which will slow demand and drive down prices. He expects high inflation levels over the next few years, gradually declining and settling around the neutral 2.5% baseline in 2025-2026.

What are the Effects of Inflation?

The current inflation level is causing many Americans financial stress. With the prices of goods and energy increasing, people are having a harder time paying for necessities like food, bills, rent and medical care. People are skipping necessary medical care because they are worried about medical costs. Loan delinquency rates are also increasing as people struggle to pay their bills.

Inflation and the tight labor market are causing labor costs to increase rapidly.  To attract and retain employees, employers are offering higher wages which can perpetuate inflation.

What is the State of the Labor Market?

The current labor market is tight with the national unemployment rate around 3.5% and Wisconsin’s unemployment rate at 3.1%. The normal baseline for open positions is around six or seven million; currently, there are over 11 million job openings in the US. Around 4.5 million people quit their jobs every month. This is the highest level of churn the US job market has seen.

Right now, there are an unprecedented two job openings for every worker. Workers have the power in this labor market with employers competing to attract and retain employees. Wage growth should be at about 3%; it is currently at 5.2% and is projected to increase over the next few months as workers demand higher wages to deal with inflation.

Before the pandemic, 63% of Americans were in the workforce meaning they were either employed or unemployed but willing to work. During the height of COVID, the workforce dropped to 61% because people with underlying health conditions, people with children in childcare, and early retirees left the workforce. Now that vaccines and effective treatments for COVID are available and childcare is open, people are returning to the workforce. Some early retirees are also re-entering the workforce because they can no longer afford to retire.

What Can Employers Do?

The current inflation rate and labor market conditions are creating challenges for both employers and employees. However, employers can lower their costs while attracting and retaining employees by rethinking how they offer health care.

  • Encourage preventative care for employees. Helping employees understand they can seek preventative care at no cost can catch potential health issues before they become more dangerous and costly to treat.
  • Consider providing direct primary care. Employers can choose to open a direct primary care clinic or work with an independent provider to offer care to their employees. Working with a direct primary care provider, employers pay a flat monthly fee to offer free care to their employees. This encourages employees to utilize preventative services and take an active role in their health.
  • Consider providing wellness clinics. This encourages employees to monitor their health. Employers can also incentivize wellness activities in their benefit plan to persuade employees to improve or maintain their health. For example, if an employee takes a health risk assessment, the employer can contribute money into the employee’s HSA account to help pay their deductible.
  • Consider self-funding. By self-funding, employers only pay for the health care their employees use instead of paying a set premium to an insurance company.
  • Consider redesigning the health benefit plan. Creating a tiered plan incentivizes employees to seek care with high-value providers while still offering a broad network of choice so employees can receive care where they feel most comfortable.
  • Steer employees to high-value health care. Directing employees to seek care where quality is good, and the cost is low can help employees get the care they need at a more reasonable price while saving the company money.

Learn more about Steve Rick’s presentation at The Alliance’s Fall Symposium and Annual Event.


Data & Analytics


Events by the Alliance Members & Employers


Data & Analytics


Events by the Alliance Members & Employers
Jennifer Austin

Jennifer Austin
Senior Director of Strategic Marketing and Employer Engagement

Jennifer Austin is the Senior Director of Strategic Marketing and Employer Engagement at The Alliance. She leads the marketing and account management teams in all aspects of marketing and customer engagement, including brand strategy, paid advertising, public relations, social media, website development and optimization, and events. Her account management team manages over 425+ employer-members who serve for over 118,000 employees, getting them access to the best care at the best price. Prior to joining The Alliance, Jennifer worked at a number of agencies in Chicago and Madison, including Healthgrades, focusing on marketing and strategy development for hospitals and health systems, including Advocate Healthcare (now Advocate Aurora Health), Augusta University Health, and HCA Healthcare. Jennifer has nearly 20 years of experience in marketing and advertising. She earned her master’s degree in Global Marketing, Communications and Advertising from Emerson College and her bachelor’s degree in Art and English from The University of Iowa.

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