Are These Economic Indicators Real?
It seems as if in every meeting these days everyone is talking about a possible recession, market slowdowns, stagnating sales pipelines, etc.
CNN recently published a story saying that America’s CFOs are bracing for a 2020 recession. They cite quotes like this one: “We’re overdue for one of those cleansing recessions,” Duke professor John Graham said in an interview. And Graham said CFOs are growing more certain of a 2020 recession because of the paralyzing consequences of economic and political uncertainty — including trade wars — on business. “Faced with uncertainty, companies may pause by holding off on spending and hiring. That can turn into a self-fulfilling prophecy,” Graham said.
5 Key Facts About the Self-Fulfilling Prophecy:
1. There is a shortage of skilled workers
In July 2019, the US economic expansion was the longest on record, surpassing the 1991-2001 boom that was marked by the rise of globalism and the internet. And the unemployment rate is at a 49-year low.
2. We are trying to support the lack of skilled workers by bringing in foreign grad students
For instance, 83% of US CFOs support America offering expedited green cards to allow foreign graduate students in science, technology, engineering, and math (STEM) fields to work in the United States.
3. None of the major institutional forecasters are looking ahead to a recession for the rest of 2019 or 2020
According to the September 11, 2019, Conference Board, while recognizing risks to the economy, they are still forecasting real GDP growth of 2.3 percent for 2019 and 2 percent in 2020. In fact, the International Monetary Fund, forecasts in a July report: “Global growth to expand to 3.5 percent in 2020, with the U.S. economy expected to expand at 1.9 percent. The most recent forecast of the Federal Open Market Committee calls for 2 percent growth in real GDP in 2020, compared with 2.1 percent in 2019.”
4. Employment growth is focused on professional and business services, healthcare, and government
5. According to the Purchasing Managers’ Index, manufacturing weakened in August for the first time since 2016.
But it is important to note that this weakness has not spilled over into the rest of the economy.
So, knowing the facts should impact your strategic path forward. Consumer spending still drives 70% of our economy, and factors like shortage of workers only give that population more confidence (not less). Keep the pace, monitor what is happening in the segments you serve, and continue to innovate. Don’t let conjecture determine your future.