Don’t you just love all this change and uncertainty? Are we headed for recession? Isn’t it just so fun coming to work every day and having no idea what is going to happen - interest rates, inflation, how consumers will react?
Seems a little like trying to drive sales or grow a business with a blindfold on, right?
So, is a recession coming in 2023? Well, it’s tough out there, and there is so much disagreement out there over what this economy is going to do.
I need to be honest. I am one of “those people.” Yes, those people that believe we are headed for recession.
Why? Because I think if you look deep into the numbers, you can see all the signs there are pointing to troubled waters ahead.
Now hold on.
Before you start to protest and think I am a big pessimist, you need to know that just because a recession is coming, doesn't mean it can't be your best year on record.
To succeed in today’s marketplace, you first need to understand today’s market. You need to understand the shifts, know your numbers, and be able to interpret what those numbers are truly telling you.
Because once you embrace the reality – tough as it may look – you have the time and resources to make the shifts in the marketplace start working for you.
The Numbers: The Leading Economic Indicators You Need To Be Watching
If you look at the consumer savings rate, you’ll see that it is declining and predicted to keep doing so. So why does this matter? It tells you that consumers have less discretionary income, and are spending more on their cost-of-living expenses, such as food, rent, etc.
The unemployment rate is still low, which might make you believe the job market is remaining strong. But dig a little deeper, and you will see two important declining trends – the number of hours worked, and the level of those voluntarily leaving their jobs to find another is also on the decline.
So, now the Great Resignation is starting to turn into The Big Stay. And while employees may be staying at their current job, the number of hours they are getting to work is on the decline. This tells us that employers are starting to see less demand for labor.
Raising Debt Levels
Credit card balances are once again creeping up, and serve as another indicator that consumers are finding alternate ways to meet their rising monthly expenses.
Rising Interest Rates
While interest rates have been rising, and everyone thinks they are stabilizing – the truth is that is not where you should be focused. Wait, what? That’s right – interest rate levels don’t impact the economy until the debt has to be renewed. And for most of that debt we have not yet felt the impact in the marketplace. Why? Because the interest rate impact isn’t felt until your debt actually comes due and it’s time to refinance.
More than 1 trillion dollars of debt is just coming up for refinancing, and then another trillion at least behind that. So imagine the impact to a company that borrowed $100,000 at 2-percent, that now has to turn around and refinance at 6-percent. That is a big impact to their bottom line.
And last but not least, some of the debt (that companies need) won’t be refinanced. Why? Because with bank failures comes tightening regulation, and tightening credit standards. When you tighten lending, you put a chokehold on the cash flow companies need to hire, develop new products, and grow.
Now I could go on with more indicators, but then you would know just what a big nerd I am???? So I will leave it there. These indicators show enough – the signs that we all need to be watching and paying attention to. They reveal a possible slowdown coming in the marketplace. And while a slowdown can be challenging, you can navigate these shifts successfully and grow your business.
Are We Headed for Recession: 5 Strategies To Succeed No Matter What This Marketplace Does
So, while no one can be sure what the marketplace is going to do, doesn’t it seem smart to be ready, to be prepared? Here are some actions you can take to start to control this marketplace, rather than allowing this marketplace to control you.
Get Your Head Right
First and foremost, get your head right. You need to create a vision of what success looks like, and then you need to focus heavily on that vision. Why? Because in the face of uncertainty, your mind will find what you focus on.
Embrace the Suck
Don’t run away from the challenges in the marketplace - embrace that suck. If you ignore this recession, it will eat you alive. If you whine too much about it, it will take you down. Instead, whatever the obstacles in the marketplace are, find a way to use those obstacles to fuel and propel growth.
Connect with Customers
Remember, customers will need you now more than ever, so get out there and connect with them. Forget about sales – just listen to them – really listen. Because if you really listen to customers, they will tell you exactly what isn’t working for them, what they are worried about, what they need, and how you can help them achieve it. Listen to your customers and they will tell the path to growth and profitability.
Pickup the Pace
One of the biggest things you cannot control in an uncertain marketplace is your customers' decision-making process. When the marketplace gets challenging, customers slow down. If your customers slow down, you need to pick up your pace. You need more moving through the pipeline, and to move more through the pipeline, you need to increase your activity.
Consistently Fix Your Strategy
This is a marketplace that is constantly shifting, and so that means, through no fault of your own, some of the strategies you are using right now won’t work three months from now. Not because you did anything wrong, but because the marketplace shifted. You need to stay keenly aware of what is growing your business, what is not, and what else you could be doing to take your business to the next level.
So, Let’s Do This!
Let’s deal with the reality that whether a recession is coming or not, the marketplace is shifting. And sitting to wait for those changes to happen will ensure this marketplace passes you by.
So, are we headed for recession - I don't know. But taking action now will put you in a position to turn all of this uncertainty to your greatest competitive advantage.