Main Street is preparing for economic problems amid the consequences of the coronavirus pandemic and inflation.
Source: Pixabay.com
Small and medium-sized businesses (SMB), are looking for ways to recover from the negative impact of the external environment, where the coronavirus raged and provoked a global economic fall, and inflation is growing at a rate that leaves no reason for bright hopes, will be forced to remain in standby mode. This means that the business community has not yet approached the border, beyond which less difficult times begin.
The tendency of a steady continuation of the inflationary trend and the situation in the US labor market, which showed a decline in early April, led Fed officials to hint at a rate hike. The policy of raising rates started a year ago. At the same time, Fed officials estimate the probability of a recession by the end of 2023 as 50 percent.
The notes published at the last meeting of the Reserve system confirm that in fact, the risk of a recession in the US economy is slightly higher than in the official forecast. Many businesses and consumers are not optimistic about the economic prospects shortly.
In the United States, the results of special surveys indicate that fears of a recession in the period from October 2022 to January 2023 decreased, but the number of those who are characterized by such fear is 59%. This state of affairs is similar to a situation when the mood has improved but has not become positive. Consumers, observing a decrease in inflation, admit the possibility of a recession.
Financial institutions of all sizes are not optimistic about the future. This is confirmed by the actions of some banks. Bank of America has stopped recruiting staff. Citi predicted a moderate recession in January and increased bank reserves in case of loan growth and loan losses.
Capital One and American Express are also taking steps to increase their funds due to concerns about the high probability of a recession.
Main Street has so far adhered to a policy of raising prices to cover the costs of doing business. Many enterprises see a way out in using automated systems to reduce costs. Business, realizing the likelihood of economic shocks shortly, is doing everything possible not to find themselves in a situation of unpreparedness for new realities.
As we have reported earlier, US Banks to Report Profit Decline.
