The month of January is the time to reflect on where we see our company’s growth and sales going. For a majority of the industry sectors, the U.S. economy can play a major role in the success of a company. Think about the ripple effect, which we have mentioned before as a factor of a business’s cash flow. The same type of ripple, or chain reaction, can occur to businesses from the state of the U.S. economy.
Since the U.S. entered an economic recession at the end of 2007, the road to recovery has been difficult for businesses and their cash flow. We came upon an article published this month on MarketWatch titled “Five predictions for U.S. economy in 2015” and wanted to share and comment on their predictions. While we may not be economists, we definitely have our experience in the business world.
Here are our thoughts:
Prediction #1: The economy will grow 3% for the first time in 10 years.
Our thoughts: We have been tracking and analyzing the reports from Experian/Moody over the past year and all signs point to economic growth for the small business sector. While economists have been predicting growth over the past few years, we believe this could be the year that the U.S. economy succeeds. To add to this prediction, Nuveen’s Bob Doll predicted the U.S. economy will contribute more to global GDP growth than China’s. If this occurs, it would be the first time it has happened in nine years.
Do you think the U.S. economy is having an 80’s flashback? (See: http://qz.com/321494/the-us-economy-isnt-having-a-90s-flashback-its-having-an-80s-flashback-and-its-totally-rad/)
Prediction #2: Wages will finally accelerate after years of stagnation.
Our thoughts: The Experian/Moody Small Business reports for the past year have indicated that business owners are much more optimistic about the future economy. We predict that with optimism will come more job openings as businesses anticipate growth. With that being said, we believe 2015 will have a slow start to wage acceleration. With wages being stagnant for several years, getting back on track is a long way away. While the unemployment rate is currently at a 5.8%, which is much lower than in years past, there is still high competition for jobs within the majority of industry sectors.
Prediction #3: The sharp decline in unemployment will start to seem real.
Our thoughts: Our opinion on this prediction relates directly to prediction #2. With years of unemployment problems throughout the U.S., the mindset of the working population is disheartened toward what they have experienced over the past seven years. It will require a significant amount of time to change these views. The good thing about the MarketWatch prediction: it is all based upon perception of the economy and the truth is in the numbers.
Prediction #4: Inflation (and deflation) won’t rear its ugly head.
Our thoughts: The changes in the global oil industry have resulted in lower costs at gas pumps; and that is a reason to celebrate. The MarketWatch article predicts that everything will even out. We find this prediction quite optimistic. Currently the European Central Bank is struggling to fight off deflation. While the U.S. continues to maintain a positive PIC reading, the Federal Reserve has recently reported their concerns that inflation is under their 2% target. According to a November 14, 2014 study by Bank of America Merrill Lynch, nearly 70% of global fund managers believe the greatest risk in 2015 will be the possibility of deflation. We think we are far from having a steady balance between inflation and deflation.
Prediction #5: The U.S. will perform well even if the rest of the world doesn’t.
Our thoughts: We were concerned when we read the global recession projection from David Levy earlier last month. While we did not fully agree with the prediction, we always believe businesses should be cognizant of global predictions so that they are not shocked if it indeed does happen. See our comments here: http://www.prweb.com/releases/2014/11/prweb12335040.htm. Over the past month it has become much clearer that all signs point to recovery for the U.S. With the U.S. being an economic powerhouse globally, we agree with MarketWatch’s claim: “The world’s economy can still function as an oasis in a desert despite the claims of doomsayers that those days are over.”