For the last month, I have been repeatedly asked my guess on the economy in 2023. Will we go into recession? Should the business leaders I coach go all out, stay on course or pull back severely? It is tricky to forecast 2023. Depending on the industry, and the company any of the above could be correct.
Here are some things to consider in the macro economy:
China opening up just before the New Year holiday. While the supply chain has greatly improved, millions of people traveling with ineffective vaccinations could easily curtail Chinese production capacity for the second quarter.
War in Ukraine – The continuing catastrophe in the Ukraine is affecting commodity pricing, energy in Europe and causing starvation in Africa and the mideast.
Consumer spending in the US – 70% of the economy is consumer spending. With the price of gas dropping, we all can afford a couple more eggs. We may not be buying cars if our current one hasn’t broken down, but we are traveling again.
Unemployment in the US at a 50 year low– The leisure and hospitality industry is hiring as many people as it can find as is the health industry. These tend to be lower paying jobs. In the meantime, tech related large businesses are continuing to announce layoffs. This week it was Salesforce, Genesis, Stitchfix and Amazon. They mostly are laying off overhead or staff positions, not frontline workers. These are people who will get new jobs fast.
I suspect that fewer people will jump companies in 2023. Salary increases are beginning to slow down. Hiring will remain difficult. If your sales have slowed, be judicious about layoffs. Focus on profitability, but be aware that we may be stuck in this uncertainty for quite a while.
My suggestion is to focus on the fundamentals and kick some butt in 2023. Don’t be too conservative or too wild. And, be ready to revise your strategy as we get clearer direction.
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