Is the U.S. economy headed into a recession? Has inflation peaked? When will the labor market ease?

While economists debate questions like these, it’s helpful to hear from the men and women who own and operate businesses throughout Washington state. The Association of Washington Business staff spent the summer collecting information from employers through a variety of channels, including a series of in-person meetings held throughout the state, as well as a new quarterly employer survey.

That information, combined with fresh data from the AWB Institute’s economic dashboard called the Vitals, shows that employers continue to face challenges from inflation, a lack of qualified workers, supply chain disruptions, and a challenging tax and cost environment. At the same time, they’re growing more concerned about the possibility of a recession.

In July and August, AWB staff traveled the state to visit with employers and business leaders in their hometowns. The meetings were focused on three main topics: people, power, and production.

Ensuring a skilled workforce remains a top concern for most Washington employers. At every stop, employers told us they continue to have a hard time finding qualified workers. Many are raising wages, offering new benefits, and adopting flexible schedules in an effort to attract staff.

The rising cost of energy is only going to increase in importance in the coming years. Few employers said they were prepared for the surge in fuel prices coming next year as Washington’s cap-and-trade system goes into effect.

Production of items made in Washington is at the center of the state’s goal to double manufacturing over a 10-year period. It’s an ambitious goal, and it’s intertwined with people and power. If Washington is going to double manufacturing, we’re going to need more workers. And we’re going to need to preserve the competitive advantage that low-cost power has long provided to Washington.

In the latest AWB employer survey, conducted over a two-week period in July and August, two-thirds of employers said inflation and lack of qualified workers remained their top two concerns.

The fear of a recession was growing, with nearly three-quarters of employers saying they were very or somewhat concerned about it. While only 3% of employers reported making layoffs, 15% said they delayed hiring because of recession concerns, and more than one-third of respondents said they delayed making capital expenditures.

Numbers from the online dashboard Vitals show that Washington’s taxable retail sales grew at an annual rate of 10.7% in the first quarter, down slightly from 12.2% growth the previous quarter. Some counties saw strong growth, including Pend Oreille (45%). Only two of Washington’s 39 counties recorded lower retail sales.

That’s mostly good news, but the Vitals also show there was no growth in quarterly employment for the state as a whole between the first and second quarter, and 28 of 39 counties saw drops in average quarterly employment. The national and state unemployment rates remain extremely low, but this is a data point worth monitoring. Also worth watching: Workforce participation rates have decreased slightly since 2019.

It’s well known that employers crave certainty and predictability, two things that have been in short supply during the last 2 1/2 years. This is why we need new and better solutions to the issues facing employers, and why employers need us to be champions for the economy.

Kris Johnson is president of the Association of Washington Business, the state’s chamber of commerce and manufacturers association.