But planning, budgeting, and forecasting can protect your business.
It’s anyone’s guess when or if a recession will actually hit the US economy, but small business
owners are cautious. Many thought that by now, the economy would have seen bigger headwinds, but consumer confidence and spending continue to be relatively strong. Even for B2B companies this is good news, as consumer spending accounts for about 70% of all US economic activity.
Still, there are warning signs. Inflation is persistently high: The Personal Consumption Expenditures price index, the Federal Reserve’s benchmark measure of inflation, was up in January to 5.4% from a year earlier, after a reading of 5.3% in December. Though there were several months of moderation in late 2022, we are a long way from the Fed’s goal of a 2% inflation rate.
All signs indicate the Fed will continue rate hiking to tamp down inflation, but by reducing
demand, and thus putting the brakes on the economic engine. (Rate hikes will continue to
make borrowing capital more expensive for small businesses.)
Last week, the Wall Street Journal reported that demand for workers seems to be slowing down, based on data from online recruiting companies ZipRecruiter and Recruit Holdings. Nervous? With the right financial planning and management in place, you don’t have to be. We can help you track KPIs, manage cash flow, and budgeting and forecast income and expenses, and set goals. These are always key business activities, but especially in economically uncertain times.