Navigating Uncertainty: Insights from the January Economic Summit

At the Tampa Economic Summit, attendees were curious about the local economy, AI’s impact, cryptocurrency, and the status of the U.S. dollar as a reserve currency.

Regions Chief Investment Officer Alan McKnight and Chief Economist Richard Moody gathered on a foggy morning nine days after President Donald Trump’s inauguration to cut through the uncertainty, providing key economic insights. The event was hosted by April Grajales, Commercial Banking executive and Tampa market executive, as well as Ray Hand, Private Wealth Management regional executive for Florida.

The panel began by addressing the local economy, where trends and challenges echo what’s happening at a national level. Tampa is growing, outpacing the national economy in some areas, but the spike in growth came with growing pains and was accompanied by setbacks.

Tampa’s Resiliency

“There are still ongoing disruptions from the hurricanes as residents rebuild,” said Moody. That includes 2024’s Hurricane Helene, a deadly $79.6 billion disaster with impacts to housing, agriculture and infrastructure in Florida, Georgia, North Carolina, South Carolina and Tennessee.

“Tampa continues to grow at a faster rate than the U.S., but that differential has narrowed,” Moody said. “Last year, local growth started to slow down, job growth started to slow down, particularly in areas like transportation, finance and construction.

Tampa continues to grow at a faster rate than the U.S., but that differential has narrowed. … You’ve grown so rapidly, now you have these dissociative problems that accumulate over a long stretch.
Richard Moody, Regions Chief Economist

“In a way, you’re the victim of your own success. You’ve grown so rapidly, now you have these dissociative problems that accumulate over a long stretch.”

Housing Supply Issues

“The housing market has gotten really challenging between higher interest rates and just the extent to which house prices have risen,” said Moody. “We did start to see house prices decline in the Tampa metro area the last four or five months of last year, but keep in mind that house prices are still about 68 percent higher than they were prior to the pandemic.” Moody also noted that storm-related damage to the supply of housing in an already under-supplied market is likely to keep upward pressure on home prices.

Large cities across the U.S. have similar issues. “Housing has just gotten prohibitively expensive, particularly workforce housing. What we have are these metro areas which have been growing rapidly, but their labor supply has become an increased issue, not because of the availability of labor, but because of a lack of affordability in housing. People have to live further and further out.”

AI’s Impact on the Labor Market

An investor in Tampa, pointing to the January release of a Chinese-built large language model called DeepSeek-R1, asked the panel about how these advances in AI might impact the labor market in the U.S.

“I’m one of those people who tend to be more optimistic about the potential for AI,” said McKnight. “Given demographic trends including the silvering of the globe and slower growth in the labor force, we need greater efficiency of labor. AI is a way to bring that about.”

Given demographic trends including the silvering of the globe and slower growth in the labor force, we need greater efficiency of labor. AI is a way to bring that about.
Alan McKnight, Regions Chief Investment Officer

“What happened with DeepSeek is negative from a capital expenditure perspective. The flip side of that is, if you can develop these models at a cheaper rate, the benefit to companies and the margins they can create because they don’t have to pay hundreds and billions for the research and the data centers — that will be a good thing.”

AI and a Return to the ‘Productivity Miracle’

“If you’ve heard the term ‘The Productivity Miracle,’ that’s referring to the period between 1996 and 2005 when we had average annual productivity growth of 3 percent, almost triple the prior 30-year average,” Moody said. “That’s something we ought to be shooting for.”

“So, automation itself isn’t the concern; our ability to help workers adapt to it is,” he continued. “It will be incumbent upon our educational institutions to deliver training, education, and continuous learning to achieve that.”

The Status of the U.S. Dollar as a Reserve Currency

Another attendee asked about the risk that the U.S. dollar’s reserve currency status could be eroding. He pointed to the Chinese yuan and bitcoin as potential challengers to the dominance of the dollar.

“We think the U.S. dollar will remain reserve currency for an indefinite period,” McKnight said. “And we hope it will because it’s going to be critical to financing our debt and maintaining the U.S. as a primary transaction platform, the U.S. as a business platform for the world.”

We think the U.S. dollar will remain reserve currency for an indefinite period. And we hope it will because it’s going to be critical to financing our debt and maintaining the U.S. as a primary transaction platform, the U.S. as a business platform for the world.
Alan McKnight, Regions Chief Investment Officer

“I would add on a caveat,” said Moody. “Just because we don’t see an alternative today doesn’t mean one won’t emerge tomorrow. That kind of complacency could accelerate the development of an alternative.

“My premise of how this could go is that there won’t be another dominant global currency,” Moody said. “With globalization slowing and the threat of expanded tariffs, we could just see economies becoming more regional rather than global. We’re not at the point where we’re seeing anything like that on the horizon, but we shouldn’t take that as a license to not put our fiscal house in order.”

Perspectives on Cryptocurrency

On the question of cryptocurrency, McKnight acknowledged its value but spotlighted its limitations. “You certainly have cryptocurrencies, bitcoin and others, you have the euro, the yen, the yuan — but none of those are really effective competitors to the U.S. dollar” as a reserve currency, McKnight said. “We don’t think that’s going to change in the medium term. For all of the interest in bitcoin and cryptocurrencies, how many folks here have actually purchased something with a cryptocurrency?

“The reality is that when you look at the actual transactions in cryptocurrencies, they’re negligible outside the dark web. Because there are very few actual transactions going on, they’re more of a store of value right now, more equivalent to gold or silver.”

Diving into Complex Issues

The Tampa Economic Summit highlighted the complex environment that U.S. investors face. The panel discussion addressed key concerns, including the impact of AI on the labor market, the enduring strength of the U.S. dollar, and the role of cryptocurrencies.

In addition, McKnight regularly speaks with national media to share his views on market activity, the economic impact and Regions’ outlook moving forward. Upcoming interviews include:

In addition, McKnight is a panelist for Bloomberg’s The Future Investor event Feb. 11.

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