The economy’s hard to read, so what goals should you be focusing on for 2023?

There are a lot of differing opinions about the economy right now because the indicators contradict each other.

For example, inflation keeps reaching all-time highs, yet consumer spending is strong. Also, the GDP declined two consecutive quarters (but increased 0.6% for Q3 2022), yet employment continues to grow.

Because of the unusual economic conditions, making business decisions based on future predictions is a challenge right now.

What to do in a turbulent economy

Naeem Ishaq, CFO and executive vice-president of the employee background check software company Checkr, said to prepare as if there are going to be financial challenges ahead and to be certain that you have enough money to keep the business going for at least the next 12 months.

In a panel discussion at the 2022 Checkr Forward conference, he said, “Think about managing your business as something that’s not so dissimilar (to) managing your household. So if you know your car’s a little bit rickety … you might want to start to save up a little bit, knowing that you might have a repair on the way. That goes back to being in a defensive posture, ensuring that your costs are in the right place, ensuring that your capital position is in the right place.”

Isaq added that before you start setting growth goals for 2023 – such as recruiting more top talent – you may have to “reposition where you sit in the marketplace” and re-evaluate your pricing.

A poll of conference attendees about what strategies they were planning to implement in the next year found:

• 43% will be revisiting their spend efficiency
• 36% said they’re “upleveling” talent through employee development, and
• 21% are going to invest in tooling or processes that increase productivity, such as automation.

What’s coming next

Another panelist, Dr. Lee Ohanian, a UCLA economics professor and advisor to the Federal Reserve Banks of Minneapolis and St. Louis, said that because of inflation and high interest rates the next six to nine months will be like navigating a boat through choppy water.

However, he also said, “A year from now, or by next summer, I think we will have seen the worst of this. Inflation will be down.”

“Even though we are entering some difficult economic waters, and we may enter that recession territory now that a lot of that employment restoration (from COVID) has been completed, the U.S. economy always comes back,” Ohanian said, adding that adjusting your employee compensation and incentive strategies to attract talent while in a weakened economy could give your business a competitive advantage when economic conditions rebound.

For tips on keeping your company’s budgeting approach balanced in an uncertain economy like this one, check out the Resourceful Finance Pro webinar “Budgeting for Growth: Better Frameworks for Financial Decision-Making.”