The Recession that Never Was…YET!
On October 17, 2022, Bloomberg Economics published an article saying that there was a 100% chance for a recession within the next year.
Now, did Bloomberg Economics not realize that crystal balls aren’t a real thing?? Cuz…
We all heard the saber rattling of “pending recession.” Supply chain employers especially heard it because bad news hits the supply chain first and hardest. So what did they do? They tightened their belts. Battened down the hatches. Prepared for a downturn in spending.
Profits went up.
Consumer demand went up.
Inflation, yes, went up as well.
Employers were simultaneously trying to scale up to meet demand while being cost weary about a possible recession. How can you have a growth mindset when you’re being told that heavy capital investments could be risky due to what might happen? They’re caught between a rock and a hard place because capacities need to expand, new technologies need to be implemented, and the doughnuts have to continue to be made at a higher volume – all of which requires money. But…we’re not supposed to spend the money…so which is it?
10 months into 2023, no recession. The September jobs report showed twice as many jobs created, 336,000, then was forecast. Speculative markets remained mostly stable with the stock market at basically the same place in October as it was in January. All of this despite geopolitical upheaval, American political chaos, and climate change impacting shipping and freight movements.
Now, just so we don’t jinx ourselves, this doesn’t mean that a recession won’t happen soon. A Fortune magazine article from October 5 cites a lag in the impacts of inflationary pressures on markets and GDP. Interest rates above 8 percent continue to slow investment in everything from housing to new technology.
Tip: Spend money on talent!!! I wrote about the importance of quality supply chain talent and hires for this year and moving forward in this piece from March. This may seem obvious but you’d be surprised at how many employers of influence don’t place a premium on their executive hires.
Conclusion: What to Look for in 2024
It goes without saying that volatility will remain the constant in supply chain. Whims of consumer demand, shipping and freight interruptions, rise in automation and tech, and other geopolitical disturbances will create more chaos than usual. 2023 shook out mostly as expected with the exception of the incoming recession (yet!) and some normalizations in the tech start up markets. But, given the recent rise in global conflict and unprecedented climate events, 2024 is likely to be more of the same. Some things to keep an eye on as we enter 2024:
- Recession: not out of the woods yet with high interest rates increasing hurdles for capital investment and turmoil in the middle east along with rising concerns in China and the ongoing war in Ukraine could strain the price of oil and at minimum create uncertainty in the markets.
- Onshoring and nearshoring continue: Many of these wheels are already turning so this is not a bold prediction. Its impacts are the real story as the right talent to start up new plants in the US and run them competitively will emerge as a bigger story. The states and regions that support industry will be the winners.
- We will be in an election year that will again bring angst and differences to the forefront. These are challenging topics for all and can creep into the workplace. It is impossible to say how things will shake out but state of mind of employees in the third and fourth quarter of 2024 will be impacted.
- Emphasize Talent. Your people will help you weather these disruptions. Be creative with your hires as well.
We work hard to stay current on supply chain trends and thought leadership by releasing articles and podcasts with thought leaders. Stay tuned to our content hub! The future of supply chain is murky but we do our best to help see around the next bend. It’s important for all of us to know what’s coming next, or at the very least, to make as educated a guess as possible.