MA Design’s Guarantee – A Leader Advocate on Every Project
As we are all still coming to terms with living in an endemic stage of the pandemic, many are worried about another looming event – a recession. With the Federal Reserve’s recent hike of the interest rates to help cool rising inflation, many businesses are trying to figure out if we are heading for a dip or a dive. I will freely admit that I am not an economist, and I also want to acknowledge that this is a very complex subject and many factors may affect sectors differently, but there are many signals I think we can use to help ease some of the rising fears.
The recession of 2008 was due to poor spending habits, high interest rates, and people and businesses overextending themselves financially. This, coupled with the lack of oversight in the banking system and other parts of the financial industry, led to the Stock Market crash, and have been shown to be the avoidable causes of the Great Depression that lasted from 2007 to 2009.
Much of this has been addressed with new regulations and more restrictions on lending practices. I say take some comfort in that. However, that does not mean there will not be a recession in 2023.
The main reason we could see a recession in 2023 is mostly due to supply-and-demand. Due to the pandemic, the world’s supply of goods across all sectors plummeted, and it has had a hard time bouncing back. Just take a look at the issues we are still seeing with getting goods off of the ships and out of harbors around the country. Unfortunately, our demand keeps going up, which drives inflation. Typically, we want to see inflation grow at about 2% every year if the economy is doing well. We are at roughly 9% as of July.
So, what steps are being taken to help reduce the rate of inflation? The Fed is trying to course correct by raising interest rates to slow our demand and spending. This will naturally lead to businesses and consumers spending less, thereby creating a dip in growth, or a small recession. This could mean projects slated to move forward may stall, but ultimately not canceled. That might actually be a good thing as we are seeing burnout in many industries that could use a bit of a slowdown.
As a company, we at MA Design went through an Antifragile exercise toward the tail end of 2020. Because of this exercise, we knew we would need more varied services in the future to help keep us sustained during times of crisis. This is what companies need to be doing now to prepare for what’s coming.
So, what does this mean? Looking ahead, here are the four tips I would suggest as we enter a slowdown in our economy that can help you and your business to be prepared and stay top of mind with clients and consumers:
Resiliency is key moving forward. Develop your Antifragile standards today to be nimble and proactive throughout the upcoming recession.