The big learning experience for small business owners in this pandemic is that we cannot ignore global forces, national economic, political and social challenges. We have assumed we are safe in our small business districts and service businesses, but not anymore. We must anticipate a future with great opportunity and greater risks.
A pragmatic tool for business owners is regularly checking key economic forecasts and indicators once a quarter. In this rocky pandemic recovery period, you may want to check for important changes at least once a month.
By checking out key economic forecasts, you are able to see a window into the minds of powerful and highly influential leaders and economists. Over time, you can be as informed as top corporate executives, who use this information to adjust their business strategies and plans for potential economic or other forces that trigger ups and downs in the economy. You can use local economic data to adjust your business strategies and plans with a longer view of three, five, or ten years. Business owners whose livelihood depends on their business can improve mid-and long-term outcomes with informed planning.
Here are three forecasting sources
Start with the U.S. Federal Reserve Bank (FED), this is our central bank. Every quarter they issue a five- to ten-year economic forecast. TV news and news sources publish the key forecasts from the FED. You can also just look it up on the internet. The FED summary looks cumbersome, but just pay attention to the headings. The top line under each heading is the current forecast. GDP means Gross Domestic Product, which is the total output of the U.S.
On March 11, the FED released the latest forecast showing the change since September of 2020.
Look for the trends up and down in the numbers under the years. For Gross Domestic Product, it looks like 2021 will be a healthy growth year. But 2022 and 2023 are lower. The longer run to 2024 is down even more.
The other major sources of expert forecasts are financial institutions especially banks and investment funds. It is best to go to your bank or financial advisor who can provide the forecasts on a national and regional level. They will also explain how to interpret those numbers. They may even have specialized reports on your industry, all for free.
Finally, you can go to your local business chamber of commerce and ask for the forecasts and interpretations they are using.
The Federal Reserve Bank publishes disclaimers that forecasting in this current environment still has high levels of uncertainty. Keep yourself informed so that you spot when the FED or other major forecasters makes a shift that you need to address.