Amid increasing fears over a potential looming recession, economists are calling for our corporate boards to reconsider how their actions are affecting the economy and society as a whole, according to a report by The Denny Center for Democratic Capitalism.
The Denny Center for Democratic Capitalism at Georgetown Law School’s report outlined some ways corporate boards can take actionable steps to boost the country’s economic health and societal fabric.
Competition can help boost worker wages, upgrade worker conditions, and improve productivity, the report argues. However, industry concentration has continued to escalate without any antitrust intervention. Furthermore, corporations are raking in more profits and raising prices in the process. This confluence of factors has contributed to a growing disenchantment and distrust of the economic system, per the report.
Moreover, workers are not being adequately compensated for their labor, the report suggests, according to Forbes. Income as a percentage of GDP has stagnated in growth for the middle class, per the report. Workers are making less money from business earnings than before, stifling their ability to increase quality of living. In 1947, workers took home 66% of corporate economic output as compensation, compared to 56% in 2023, according to the report.
There are actions that can be taken to enhance competition and improve living standards for workers. Efforts to increase competition in the airline, news media, and baby formula industries have largely succeeded as a result of strategic government intervention or through introduction of new technologies, per the report.
Moreover, economists predict that the country may be headed into recession. Data compiled by The New York Fed suggests there is a 56% chance of a recession within the next 12 months.
Economists point to indicators such as shaky job security and an unsteady federal economy as justification for its gloomy economic forecast. Though economic predictions have largely trended in a positive direction, economists see potential landmines ahead, which could undermine the nation’s economic health.
Economic prognosticators also suggest federal monetary policy drives their recessionary fears. Inflation currently sits at 3.9%, lower than 2022 and into 2023 but above the Federal Reserve Board’s 2% goal, according to the Personal Consumption Expenditures Price Index. Inflation could cause a recession if consumer spending slows down and reduces business revenue.
Further, the Fed’s interest rate hikes over the past couple of years could drag down the economy. The Federal Open Market Committee (FOMC) raised rates multiple times in 2023. During their July 2023 meeting, the organization hiked interest rates to 5.25%-5.50% In their recent meeting on January 30-31, the committee suggested that interest rates will maintain their current level, reversing previous indications they would decrease.
“The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent,” the committee said in a statement following the January meeting.
