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Blood in the Streets: A Volatile Economy Signals Opportunity

A Volatile Economy

Nathan Rothschild of the great European banking family is supposed to have said that “the time to buy is when there is blood in the streets”—meaning that opportunities abound for the bold when there are great social and economic upheavals in progress. Of course, that is also a fine time for disaster if your business is unprepared.

For the past three or more years, bullish financial prognosticators have been warning that the next market “correction” could be as big or bigger than the Great Recession of 2008-09. Market watchers say predictors/indicators are trending toward another recession, and smart businesses should stay on their toes to avoid the messy struggles that impacted our industry following the GR. Some alarmists warn we could be about to enter a depression. Whether we see a correction, a recession or a crash, now is the best time to assess your business management and operations with an eye to protecting your ad agency or marketing firm from potential economic threats.

The Outlook

Conservative financial advisors are not screaming about an imminent crash, but a gloomy final quarter and shaky financial markets in December 2018 certainly give any business owner pause. U.S. GDP is slowing and is expected to continue slowing through 2020, per the Federal Open Market Committee’s mid-December forecast. That is largely attributed to the uncertainties arising from the Trump Administration’s trade wars. Unemployment, is expected to begin to climb again, but should remain below 4.0 percent, barring unexpected economic conditions. Federal Reserve Chair Janet Yellen reminds us that many who are employed are working part-time, and that “structural unemployment”—the imbalance between available jobs and the skills of available workers—has increased, and will likely worsen. Per the Fed, the real unemployment rate (including the under-employed, the marginally attached and discouraged workers who are not seeking jobs) was closer to 7.6 percent as 2018 closed. Meanwhile, the last round of Federal tax cuts has not delivered new jobs and nor hoped-for wage growth; just as many critics of the cuts suggested, companies applied newly available funds to stock buybacks. And inflation looks to be increasing, although the Fed is comfortable with the current levels and will likely continue adjusting interest rates in 2019. 

Prepare for the Worst, Pursue the Best

While financial counselors haven’t retreated into their bunkers, they are suggesting businesses practice smart financial management. We’ve written elsewhere about the need to monitor agency finances regularly; work your business plan rather than react to in-the-moment crises; and aggressively but strategically pursue new business to protect against unexpected account losses. It is also a good time to discuss plans with your clients, and help them prepare for market challenges should the economy suddenly alter direction.

Watch for opportunities for clients, and take precautions for your own business. Preparation positions you to be bold.

Here are some additional readings to consider as you brace for volatile markets and economic conditions to come: 

How to Succeed, Not Just Survive

Focus on the Goal Line

The Peak of the Frenzy

Watch Yourself… Hard Times Are Just Around the Corner

You Need to Be Recession-Resistant

How to Avert Disaster in Your Agency

Stay the Course in Marketing as in Investing

The Value of Advertising During an Economic Downturn

What Price Goodwill?

Check on Your Clients’ Credit Situation

Five Tips for Stability in Any Recession

 

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