It’s been a while since I talked about rates, so now is as good a time as any.
First, not to pat myself on the back regarding my prediction skills, but I did say back in Feb 2023 that rates would continue to rise for a bit (they did) and then hold fast for a long time (they are).
Now with every Federal Reserve meeting, the question is “when will cuts start?”
Nobody knows the real answer, but I’ll say “not for a while yet”. Some optimists were saying we’d have 4-6 cuts this year. That was never going to happen, but now it’s starting to look like we may get one to two at best. And none is a definite possibility.
So why is that? Inflation is proving stubborn, especially the so-called “last mile” to the target of 2% (which may not be realistic). But the second part is, at least on a reported Macro level, the economy seems to be humming along.
Honestly, I’m not so sure the picture is as rosy as we’re being told it is. To give one example, job numbers have a way of not telling the real story (e.g., people fall off unemployment rolls and are not counted anymore, but still don’t have a job.) Also, someone with two part-time jobs would usually prefer one full-time job, but the numbers don’t reflect that.
This is all my way of saying: THIS is the environment we have right now, and it’s the one we have to work with. I’ve talked recently about equipment financing and growth and not waiting around for the “economic ok” from the news. Because you’re not going to get the real story.
If your company is doing well, keep doing what is working. In fact, do more of it. Add another crew. Offer more of that service everyone wants. Make the building better. Etc. That’s how you expand when things are going well.
If you are on the other side, and things were better a year or three ago, you should consider changing things up. Offer another / different service. Maybe try serving a different geographic area. Do something. Because things won’t get better on their own.
The current business environment is what we have, and it will be here for a while. Make it work.