Government Policies Could Cause Recession In 2017

April 13, 2017
While non-farm payrolls increased in March (as they mostly have in every month since the Great Recession), most metrics were little changed with large business forecasts and confidence holding still and not going up, according to CNBC. Why? Because big companies look at long term trends and short term political and economic data.

The fact that the stock market is at all time highs is distressing to many because they know that the path of least resistance is down. As in the saying, 'nothing goes up forever.' They understand that as the economy is gaining, markets are going into bubble territories again, and the Fed is raising interest rates to cool us down, and ALWAYS overshoot and cause recession.

More jobs, but even more applicants
In the recent Employment Situation Report, the BLS also claims there were more than 230 thousand new jobs in February but many were part-time or seasonal. Many jobs go unfilled because workers are not skilled and many just don't wish to work. Over 500,000 NEW applicants were more worried about finding the job they wanted in Feb. 2017.

While many economic observers see potential tax cuts and reduction in regulations by the present administration, these same observers feel that those cuts will go to the privileged few and large companies, with most everyone else potentially paying for them. And reduction in regulations is what caused the Great Recession to gain steam in 2005-8. They are afraid we may put ourselves back to square one again. (I'm referencing the Goggle Federal Reserve governors statements and top economists statements in March).

What does this mean for small business owners like yourselves and the industry in general? Recession, and higher interest rates will slow down housing retail (i.e. the construction sector), car purchases, investments in capital expenditures for large employers and cause inflation in the short term which will drive up prices for everything including what you need to charge for your services and products. Higher prices for a soda seem great but at some point workers will think twice about spending 2 bucks or more for a Coke.

Continue investing for growth
I'm not suggesting anyone hold off on expansion or capital improvements. I'm thinking that many of the smaller operators (under 5 million) may just want to go a little slower this summer to see where this all plays out. If tax rate reductions and deregulations pass, they may help your bottom line, and if rising interest rates don't cause a weaker economy by mid summer then go for the ring. You should be in good shape by then.

Interested in more?
Google: Top economists prediction for economy in 2017
Google: Potential results after Trump administration's tax cuts and deregulations.

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