Recession: The mother of innovation?
CPAs in public practice say it's coming later this year. More cautious CFOs expect to wait until 2011.
Everyone has an opinion on when the economic recovery will roll into town, and that's fine, because when you get right down to it, who the heck knows?
One thing is certain, said Chad Moutray: There'll be more pain passed around before the healing begins.
"It's certainly going to get worse before it gets better in terms of unemployment," Moutray, chief economist for the U.S. Small Business Administration, said during an interview at the Maryland Business and Accounting Expo. "We've lost 6 million jobs in the United States and the unemployment rate could go past 10 percent. Who knows where it will end up?"
Indeed, Marty Regalia, chief economist for the U.S. Chamber of Commerce, seems to agree. In this Baltimore Business Journal article, Regalia "predicted that the current economic downturn will end around September but that the unemployment rate will remain high through the first half of next year."
The good news, said Moutray, is that unemployment is considered a lagging indicator; it typically is highest near the end of a downturn. That could bode well for economic recovery.
That's little comfort to struggling businesses, of course. Many are still in cost-cutting mode, but Moutray said there are plenty of opportunities available to those who can afford to go after them. Larger companies are retreating from certain markets, and thanks to job cuts and hiring freezes, the number of talented, hungry, ambitious and available employees is sky-high right now.
Then there's this: Difficult times often bring out the entrepreneurs and innovators in us all. Tom Hood recently quoted Steve King as saying "the recession drives small business innovation," and that is certainly true. When you are forced to do more with less, you're going to come up with some pretty innovative solutions. Indeed, with their old jobs drying up, some folks are innovating brand new careers, and that presents a host of additional opportunities.
"With all that said, businesses are hurting," Moutray warned. "You have a awful lot of companies that are laying people off and cutting costs and re-evaluating their business plans. But to the extent that they can do it, if they can start looking forward one, two, three years out and seeing what opportunities are out there, that can only help their businesses."
- Check out the SBA's economic recovery resources.
- Visit economy resource centers from the MACPA and the AICPA.
Howhas the recession changed your business strategy?