As business leaders, it’s crucial to stay informed on the latest economic trends and forecasts to guide your strategic decision-making. The recent presentation on the U.S. macroeconomic outlook at the Asheville Chamber’s 2024 Annual Economic Outlook (hosted by Riverbird Research, our in-house research division) provided several valuable insights. Keynote speaker Ben Harris (Vice President and Director of Economic Studies at the Brookings Institution and recognized expert in fiscal policy, labor markets, and the macroeconomy) delivered a timely discussion exploring how national economic policies and market dynamics intersect with local resilience and sustainable growth efforts.
- Embrace the Soft Landing
Contrary to fears of a looming recession, the U.S. economy appears to be navigating a “soft landing” – easing into continued growth without the sharp downturn typically associated with Federal Reserve interest rate hikes. Consumption has been stronger than expected since the pandemic, driving economic growth. Meanwhile, entrepreneurship is booming. Business investment has been exceptionally strong, particularly in the clean energy sector, driven in part by the Inflation Reduction Act. This stable, balanced environment presents opportunities for savvy companies to capitalize on.
- Prepare for Shifting Labor Dynamics
The labor market has experienced unprecedented tightness, with record-low unemployment and high quit rates as workers have had the upper hand. While this dynamic is normalizing, businesses should be ready to adapt to a more balanced labor force. This may involve revisiting talent acquisition and retention strategies to remain competitive.
- Monitor Consumer Sentiment Shifts
Despite the positive economic indicators, consumer sentiment remains surprisingly low. This disconnect between objective measures and subjective perceptions is partly driven by political factors and lingering inflation concerns. The major takeaway is that the economy is normalizing, moving towards a measured and balanced growth.
- Anticipate Policy Changes
The incoming administration is expected to pursue a range of policy changes, including potential tariffs, tax cuts, and immigration reforms.- The Trump administration’s tariff agenda includes across-the-board tariffs, reciprocal tariffs, and targeted tariffs, but only a few of those proposed are legally feasible without congressional consent.
- The administration is expected to extend the 2017 Tax Cuts and Jobs Act, which will likely increase the national debt.
- Immigration policies are expected to include significant deportations and changes in asylum and parole, which could have economic impacts on various industries.
- The administration’s fiscal policies could lead to increased interest rates and a stronger US dollar, affecting exporters.
While the full scope and impact of these initiatives remain uncertain, it’s prudent to scenario-plan for how they may affect business operations, supply chains, and workforce.
- Invest in Resilience
As we’ve experienced recently, disasters can have significant economic ripple effects. Lessons from past recovery efforts across the nation underscore the importance of building supply chain resilience, providing immediate support to small businesses, and fostering community-level coordination.
- Small businesses are more vulnerable to disasters due to lack of disaster planning, less financial cushion, and less insurance coverage. They are also more likely to be women- and minority-owned which correlates to lake of equitable access. In addition, small businesses tend to be in exposed sectors like retail relying on foot traffic.
- Neighborhood impacts can significantly affect businesses, even if the business itself is unaffected.
- Loan-based assistance is a double-edged sword, with some businesses needing it to regrow, but others struggling under it.
- Immediate financial assistance is critical for businesses to get through the toughest times.
- The research indicates that renters, low-income homeowners, and racial/ethnic minorities often face more barriers in accessing disaster recovery aid. Proactively identifying and addressing these disparities will be important.
Communities hit by disaster typically come back stronger, with higher household income and employment rates. As disasters go, hurricanes and tornados tend to lead to the strongest recoveries as businesses rebuild. The reallocation of capital after a disaster can lead to a more productive and resilient community.