Despite macroeconomic uncertainty, long-term economic outlook is positive

Scott Sperling joins Joe Kernen and Becky Quick on CNBC’s Squawk Box

Key Takeaways:

• Macro uncertainty is higher than in recent memory, with rising interest rates, inflation, labor shortages, and supply chain issues brought on during the pandemic.
• Despite the risks associated with this uncertainty, there is still a lot of ingenuity that can help drive economic growth.
• Scott Sperling, THL’s co-CEO, spoke with Joe Kernen and Becky Quick on Squawk Box to discuss these macro shocks and what’s next for the economy.

THL’s co-CEO Scott Sperling was recently invited by CNBC to discuss the state of the economy. The conversation — with Joe Kernen and Becky Quick on Squawk Box — speaks to the unique and confusing macroeconomic time we’re living in as a result of soaring interest rates, inflation, labor shortages, and supply chain issues. Still, we believe an economic stabilization is possible in and that cross-sector automation and AI can drive a lot of the growth we need to get there.

We’re in the midst of major uncertainty

“The view I have had is that the macro uncertainties are as high as I’ve seen them in my 42 years in business,” Scott said on CNBC. “That has created an enormous amount of risk in a lot of different areas.”

Despite the amount of fiscal and monetary stimulus we’ve seen over the last few years, there could be unintended consequences from otherwise positive actions that were taken during the pandemic.

Even with uncertainty and soaring interest rates, we see a lot of promise in cross-sector automation

Major macro shocks to the economy — rising interest rates, inflation, labor shortages, supply chain issues — continue to cause concern for many. Earnings may not meet expectations in the next couple of quarters, which the market will have to absorb, but business models have improved overall. As investors, we believe there are opportunities for growth within these macro conditions, specifically when it comes to technology and automation that can help drive productivity across key areas.

“Ingenuity, technology, often deregulation leads to spurts of significant growth that’s been very helpful to the U.S. economy, and obviously we’re a major player in the entire global economy,” Scott said.

Automation and AI could play a key role in driving productivity and, as we ultimately see it, economic growth. Automation can fill gaps in the available labor force and allow existing employees to focus on higher value-added tasks, earn higher hourly wages, and be more productive overall. We see this in healthcare and life sciences, in manufacturing, and in more traditional office environments.

Potential upsides to economic growth in the long term

Productivity is key here. As Scott offered during his appearance on CNBC, we’re not going to get back on track by just bringing wage rates down to under 2% — that is, unless businesses and industries embrace technologies that will make our workforce more efficient and focused on growth.

“I think what [the Fed] is saying is, let’s bring it down to 4-5% and hope that productivity brings that down to a 2% target,” said Scott. “Automation, productivity in lots of different ways are going to be critical to making that work.”

Watch the full segment on CNBC.com and learn more about automation’s potential at www.THL.com/automation.