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Central Illinois Banker: Inflation Controllable, Prospects Good

Busey Bank Chief Investment Officer Zach Holland briefed community leaders in Bloomington Normal Thursday with an optimistic view of the economy.
Charlie Schlenker
Busey Bank Chief Investment Officer Zach Holland briefed community leaders in Bloomington-Normal Thursday with an optimistic view of the area economy.

A top central Illinois banker said Thursday he's optimistic about the economy — and the strong economic performance in the second and third quarters shows no sign of slowing.

Busey Bank Chief Investment Officer Zach Holland told a business crowd at Illinois Wesleyan University that economic activity is higher now than before the pandemic, driven by consumer spending.

And, he thinks remaining warning signs will be temporary.

"The two major risks we see today, I would say COVID and inflation will be, I think, short term in nature and will be controlled by different measures and will be managed through," said Holland.

The Federal Reserve has shown little appetite for interest rate increases, and he said vaccination rates are rising as people wake up to the need to respond to the easily spread Delta variant of the coronavirus. In fact, Holland called it re-flation not inflation.

"Certain areas of the economy really had no pricing power in the last year. The travel industry, restaurants, all those related to certain industries that were really shut down are now finding they can start increasing prices again and they are, now that demand is back up," said Holland.

Holland said a full third of current inflation pressure comes from a 40% increase in the price of used cars, which he believes will ease when new vehicles are more available.

Holland said another strong sign is household debt is below 2011 levels which is good for the long-term stability of the housing market.

Business spending is rising faster than consumer spending, he noted, though business expenditures are only 13% of the economy.

Holland said the nation has regained more than 15 million jobs lost during the pandemic, but is still down six million jobs from 2019. He also noted Americans are less leveraged now than at any time since 2001 as they used pandemic down times to reduce debt.

WGLT Senior Reporter Charlie Schlenker has spent more than three award-winning decades in radio. He lives in Normal with his family.