January 6, 2023

Hello, and welcome to this episode of ITR Economics TrendsTalk. Thank you for joining us in this new year, and let’s kick it off with a quick look at this new ITR forecast. As I’m sure you’ve heard before, we have updated our expectations mostly for 2024. So 2023 is largely in the books at this point. We’ve been following the leading indicator evidence, and our new forecast is only a mild adjustment for most sectors. But 2024 is where we really will see some of that downside pressure, and specifically, I’m referring to that mid decade recession essentially being brought forward as a result of this very aggressive fed action. So we’ve been following the risks for a while here at ITR. Late last year, we did in fact pull the trigger and downgrade our expectations for, again, most sectors, certainly the industrial and manufacturing focused economy in 2024.

But I really wanted to focus on what that means in terms of timing. So as I said, this is not a new recession. This is not a new risk that we didn’t see coming. It’s really just moving forward our previous expectation for that mid decade recession. And I hate to be a little bit of a contrarian, but let’s start 2023 off on a high note, not what is the risk associated with this recession. We all know what a recession feels like. But how can you get ahead? How can you use this downside time, this slack time to position yourself, your business, your company well headed into the rest of this decade?

Now, I know it’s tough to be contrarian, and it’s tough to be that one fish swimming upstream. So instead of looking forward in this imaginary world, let’s look back instead. And I would encourage you to take an honest assessment of your last growth cycle because we did move this recession up in time from 2025 or six timeframe into 2024. What that means is that there will still be growth on the other end. Again, this is not a new risk and a new recession coming out of thin air. So look past this cycle. At ITR, we always like to look one business cycle ahead because the decisions you make today won’t just affect tomorrow, but they’ll affect your business several years down the line. So look back to your last growth cycle and ask yourself, “What do I wish I had had?”

It’s going to be different for every company. Maybe it’s the time to institute a new ERP system or the time to retool that manufacturing line, add some new processor procedure, and get your staff trained up in it. Because this downside time during 2023 later this year and 2024, that downward pressure is going to create some opportunity. It’s going to probably create some different valuations. Maybe you can get that equipment you need at a relatively attractive price. It’s also going to give you the time and the freedom to engage in these types of activities. With all of our high backlogs, low inventory, supply chain jams, everything that’s been affecting us in the past couple of years, it’s kept businesses running full tilt. You haven’t had time to be looking a little bit beyond. It’s almost like that day-to-day crisis mentality, or at least that’s how I’ve been hearing it from most business leaders.

So take an honest stock of this year. Don’t look at the downside pressure, this recession that’s coming as a pure downside. We can’t do anything to change the tides, but we can adjust our sails. So what opportunities can you put in place while you have this time, both your attention, your production time, your staff’s time? What can you put in place to make those years on the other end of the cycle a little bit more advantageous? Do it now and then next cycle, you’ll be looking back with a much happier outcome.

Thank you so much for joining me today for this episode of ITR Economics TrendsTalk. I’m Lauren Saidel-Baker. Let’s talk again soon.