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Eric Merlis
Title: Citizens Head of Global Markets Trading
Industry experience: 24
Eric Merlis has an uncommon seat to watch Massachusetts as it emerges from the COVID-19 pandemic. Head of global markets trading at Rhode Island-based Citizens, as Citizens Bank is rebranding itself, Merlis must track a range of key aspects of the economy. Prior to joining Citizens in 2015, he held a variety of trading, valuation control and regulatory positions at SunTrust and Union Bank. He holds an MBA in finance from Southern Illinois University at Carbondale and a bachelor’s degree in philosophy from Siena College.
Q: Judging by anecdotal evidence, it looks like Massachusetts is experiencing a fairly robust recovery in consumer spending. Is that showing up in the data?
A: In reality, we opened up fully three weeks ago, a month ago. A lot of it, right now, will be anecdotal. But there’s no question that a switch got flipped. I bring my kids home to an appointment at 3 p.m. when school gets out. Two months ago, there wasn’t a car on the road. Now it’s completely different, and that’s happening everywhere. You see servers wearing masks, and you see some people wearing masks in line [at the grocery store] but it’s almost as if nothing’s happened. In general, you’re getting back to that social environment that we missed before.
So how does that translate to economics? Massachusetts was one of the last states to open up fully. When you look at the 2021 numbers versus the 2020 numbers, we’re absolutely going to see the impact of that opening, whether that’s in purchases at stores, or restaurants. We’re in the first real month of what appears to be the return to what things were like before. While it’s awesome to be optimistic and I am – the vaccine appears to work and keep the variants from being deadly – but it looks like we’re going back to the thriving, social creatures we are.
What stops that? Anecdotally, what I hear from my friends who are managers, they can’t find employees – it’s that $100,000 and below [salary] range. If you work in a bank, it’s probably not hard to find people, or in biotech. It’s your local deli – they’re packed but I notice the same two people behind the counter. It’s “I can’t find someone to work.” The non-professional retail-service industry is proving to be a challenge and that’s the one thing that I’m worried could put a damper on this.
Q: Is business investment and business growth following suit?
A: On the retail/hospitality/consumer side, they’re hiring to get back to what it looked like pre-pandemic, but also “How do I address the takeout business that’s still not stopping?” Every restaurant when I’m out, I try to ask whether they’re seeing the same take-out demand, and whether it’s impacting service. There’s kind of an unnatural balance where “this wasn’t our business model before and we adapted to the pandemic.” … It’s going to be solved partly by hiring more people, but can they? We don’t know.
When unemployment benefits fully run out, people will be forced to go back to work and the labor force participation rate will go up. If we’re talking policy, I’d love to see the government say “Yeah, you can double-dip [receiving jobless benefits and a regular job] for three months.” When’s the last time you thought you could generate three months of savings?
On the high-end side, I think you’re seeing less of that. You’re seeing less eagerness to make big investments until they know what the employment picture is going to look like, because they can afford to go slow: “Are we going to build a new building? Do we want X amount of office space? What do we want and what do we have?”
Q: How is that different from the national picture?
A: In my view, and in the professionals’ views – the people I poll – as we open and continue to stay open, I think we will get right back to where we were pre-pandemic and I don’t know that completely differs from Atlanta or Charlotte. If you’re a metropolitan hub with good academic institutions around you and proximity to an airport, and a stable housing supply… you’ve got all the things that create the environment for businesses to thrive and grow. Because we were later opening up, our numbers will probably look outsized to theirs now, but we’re all moving in the same direction, which was returning to where we were December 2019, January 2020. … I’m truly cognizant of the suffering that went on, but [the pandemic] was almost like a blip.
Q: Discussions of a “K-shaped” recovery dominated the conversation last summer, and we certainly saw that in the housing market. Is that showing up again?
A: I think what I’m hoping is that the K turns back, if not into a V, then something similar to a V. The V part of the K was white-collar workers, able to work from home, didn’t lose their jobs, able to take advantage of the stock market recovery. I don’t see that going away. I think that recovery stays slow and steady. As long as the economy stays strong there’ll be job growth. I don’t think there’ll be wage inflation there. The [workers with] sub-$100,000 jobs, if we stay open, by definition they’re going to recover. Going back to the Fed and fiscal policy, I don’t see any way they’re going to want to stop that by raising interest rates.
Merlis’ Five Favorite Hobbies:
- Guitar
- Spy novels
- Soccer
- Sudoku
- Ping Pong
