Distant Thunder
August 20th, 2019

It’s a glorious summer day at the beach.  The economy is roaring along; interest rates are continuing to decline with all the benefits that come with lower interest rates; the president just postponed tariffs until after Christmas on certain items without which the world as we know it would end – such things as laptops and iPhones.  The sun is shining brightly.  But anyone who has been at the beach in the summer probably remembers seeing way off in the distance these beautiful high clouds beginning to appear.  Then you hear something that’s so far away that you can’t tell what it is, and you finally realize that it is thunder.  It’s still a long way off but it’s there, and the clouds are beginning to get larger and creep closer.

We’re beginning to see in those clouds more and more signs of a looming recession sometime in the next year or two.  In my opinion the word recession is like crying fire in a crowded theater.  But it sells ads.  Recession usually indicates big problems.  I think the economy is still healthy enough over a wide spectrum that while a slowdown is coming it doesn’t have to be a disaster.  But disasters sell ads.  One of the things worrying people to most is a US-China trade war.  Many companies are holding off on investment decisions on things like plants and equipment until the situation becomes clearer.  The US services sector declined in July to its lowest level in three years.  Last week the Conference Board said its index of consumer sentiment fell to its lowest level in nearly two years, and it is the consumer that has been driving the economy.  And then there is the inverted yield curve (next week).

So what does this say to small business?  Only that it may be time to look at all the pieces and parts of your business and make sure that everything is tight and you’re on top of your numbers.  When things are rolling like they have been there is sometimes a tendency to get a little complacent.  So a little tightening up may be warranted.  Maybe you have everything completely under control, but you want to keep an eye on the clouds.  You don’t want to get caught without an umbrella.

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