As we wind down a good 2015, I’ve reflected quite a bit on the current business climate.
Let me state that none of this is political, as I’ve never believed that one President or Congress has significant impact on the economy (good or bad). I see the economy as a much bigger force than any given administration’s policies can have significant impact on. I’m hardly an expert, just a small business owner who lives every day observing corporate budgets, hiring, firing, spending, marketing, innovation, etc.
I’ll start by saying that my own company had a good year. We grew on all fronts – revenues, profits and employees. (and of course, expenses … but that comes with the territory) In fact, the strongest year in our history. Could growth have been stronger? Always. But I can’t complain. We achieved some wonderful things this year, moved into sweet new digs, hired some awesome people and continued to knock out killer work for our clients. But this post isn’t about emagine. I digress …
So how is the economy doing?
The period between the financial crisis and now has been very unique. Typically, a recovery is pretty easy to evaluate based on various data: GDP, unemployment rate, consumer confidence – and less formally, even your own personal financial picture. But this one has been strange …
Turn on the news (whichever politically-biased flavor you choose) and hear the variety of contradictory data. Over on MSNBC they’ll have you believe that we are experiencing the strongest economic recovery in history, all due to President Obama. Flip to Fox News and hear their experts pointing out negatives like the “real” unemployment rate and other terms most of us never heard of before. Bottom line? We can’t believe any of them. We officially live in a world where every media outlet has a political agenda. We must form our own opinions – which is what I’m writing about today.
The economy is kinda pretty good
It’s my opinion that the economy is doing “pretty okay” (my highly-technical economic vocabulary in full effect there). Companies are doing well (some doing great, some poorly) but overall businesses seem to be performing relatively strongly. BUT … they’re behaving much more cautiously than in previous recoveries. One of the unique things about this recovery is that it seems everyone (including me) is constantly waiting for the next crisis. Is the stock market about to crash? Will there be a major terror attack? Is the Fed’s decision to finally start raising interest rates again going to stall everything? I’ve found myself through this entire recovery hoping for it to accelerate. But it just kind of plugs along (hey, that’s much better than recessionary performance – so I’ll take “plugging along”).
The emotional roller coaster that is Wall Street
As always, the stock market has me on a perpetual emotional roller coaster. The Dow is ending the year in negative territory while the NASDAQ (led by Amazon and Netflix) performed strongly. Apple’s stock has closed lower in 5 of the last 6 months, but analysts expect a big rebound in 2016. Bottom line? Again, who knows?
Hiring of skilled workers is strong. I hear a lot about jobs being shipped overseas, etc. Trust me, if you have a technical skill (whether engineering, coding, etc.), there are TONS of high-paying jobs out there. Companies (including mine) are starving for technical talent.
The bad news: a business or marketing degree (even MBA) won’t really get you very far. The job market is focused on technical skills. Students entering the workforce over the next few years are going to be in for a rude awakening if they don’t somehow figure out how to focus on a particular high-demand skill. But they’re not preaching this in universities, which scares me.
All in all, I think we’re in good shape. I’m optimistic about 2016. Companies will continue to invest and hire, but cautiously. The stock market is most likely going to be a tumultuous ride. (I’ll venture a guess predicting a relatively flat year). Interest rates will rise a bit, which will slightly stall the housing recovery. Barring any major tragedies or outside forces, we’re likely looking at another positive year – not quite as great as we’d all like, but better than negative.
Some closing notes
- Keep marketing all the time. Be ahead of your competitors in the event of a downturn. When markets get smaller, your share of them becomes more critical.
- Adapt to change happening all around us. Traditional business principles will never completely go away, but denying cultural and technological trends will lead to the demise of the stubborn.
- Watch your cash flow. Whether it’s in 2016, 2017 or 2018, we will experience another downturn. Remind yourself of that every day and protect yourself and your employees by having prepared for it.
- I don’t have kids so I never give parenting advice. But if you have kids, focus on technical skills. Companies will continue to desperately seek more technical talent and those with general degrees will find the job market more and more challenging.