With recent tax cuts, low interest rates, and productive spending, the US economy is currently in a strong position. Yet in recent months, financial experts have been warning of a possible economic downturn. Cyclical upturns and downturns are a normal part of a free market economy, but those low points can still have consequences for small businesses. No one can perfectly predict when an economic slowdown will begin or how severe it will be, but experts estimate negative economic trends emerging as early as 2019. Such a downturn would likely entail decreased value in the stock market, higher interest rates, and lower levels of consumer spending. All business owners should stay informed and be prepared for any economic climate. Here are a few indicators of economic recession and what you can do to insulate your business against the negative effects.
Know the Signs
Certain market trends typically signal economic downturns. Many finance-focused publications and news outlets regularly report on these trends. Keep yourself informed, and seek information from a variety of sources to ensure it is accurate and up to date. Here are a few examples.
Make a Plan
Rain or shine, smart business owners maintain a contingency plan for the worst possible outcomes. Here are a few questions you might discuss with your team in anticipation of a market decline or decrease in customer spending ability:
Conerly, Bill. 8 Sep, 2017. Economic forecast 2018-2019: Consumer spending grows slowly. Forbes.com. Available at https://www.forbes.com/sites/billconerly/2017/09/08/economic-forecast-2018-2019-consumer-spending-grows-slowly/#2c4d9d013ba7.
Egan, Matt. 22 Feb 2018. Hedge fund billionaire: 70% chance of recession before 2020 election. Money.cnn.com. Available at http://money.cnn.com/2018/02/22/news/economy/recession-election-ray-dalio-2020/index.html.
Simson, Walter. 25 April 2018. A recession threatens. Do these 3 things to protect your business. Inc.com. Available at https://www.inc.com/walter-simson/a-recession-threatens-do-these-3-things-to-protect-your-business.html?cid=search.
Winton, Neil. 28 Dec 2017. US car sales will slip a bit in 2018, but things could get grim after that. Forbes.com. Available at https://www.forbes.com/sites/neilwinton/2017/12/28/u-s-car-sales-will-slip-a-bit-in-2018-but-things-could-get-grim-after-that/#7632795f7809.