The answer is yes according to a recent article in the Financial Post. According to their sources, the odds are increasing that we will experience a recession sometime in 2023. Here is how they describe the situation:
Economists at Deutsche Bank split from the pack last month when they called a U.S. recession, but they figured they wouldn’t be lonely for long. They argue that the United States will fall into recession late in 2023 as the U.S. Federal Reserve raises rates more aggressively to deal with inflation now running at a four-decade high – and likely to remain well above target through next year.
“Our call for a recession in the U.S. next year is currently way out of consensus,” economists David Folkerts-Landau and Peter Hooper said in their report last month. “We expect it will not be so for long.” And it wasn’t. Bank of America strategists warned a few days later that inflation could tip the U.S. into recession.
And according to Lawrence Summers, former Treasury Secretary:
America has never experienced inflation above 4% and unemployment below 4% without an economic slump following within two years. In March consumer prices are estimated to have soared 8%, with the jobless rate sitting at 3.6%, Bloomberg reports.
“The combination of overheating, followed by policy delay followed by supply shocks means I think it’s a very difficult set of challenges, and recession in the next couple of years is clearly more likely than not,” Summers said. “I suspect that’s how the consensus will evolve.”
Because inflation is running at a four-decade high right now, the Fed will most likely continue to raise interest rates to combat it. Most economists believe the Fed will raise rates by 50 basis points at each of the next two meetings in June and July, followed by 25 bp rises at the remaining meetings, putting the rate at 2.6% by year-end. More hikes next year will bring the rate to 3.6% by June 2023.
The good news is Deutsche sees a “mild” recession…..
What does all this mean to business owners? Frankly, the window on the strongest seller’s market will be likely closing sometime towards the latter part of 2023. The really good news is that we are not even halfway through 2022, giving you ample time, if you move quickly, to take advantage of the current seller’s market.
Now history tells us that even during recessions, businesses can find buyers; certainly valuations will dip a bit and it is harder work to find an optimal buyer during recessions, but it can be done. However, you may have to wait until the next seller’s market in 4-5 years' time if you miss this one.
The American business owner landscape is full of horror stories of entrepreneurs that did not move in 2007 only to be derailed by the financial crisis and recession of 2008 and 2009, forcing many who survived to wait several years before exiting.
To learn more about how Generational can help you successfully navigate the next 12-18 months, you should set aside some time and invest it with us by attending a Generational Growth and Exit Planning Conference near you.
You will gain a wealth of information about what you need to do to build a buyer ready business in today's and tomorrow’s pending economic environment. To find a conference near you and to register to attend, please click here.
Carl Doerksen is the Director of Corporate Development at Generational Equity.
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Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
Thanks again Phil and feel free to have a future client call me if they would like a referral. You are a true professional!Andy Graham, Vice President, Modern Heating & Plumbing
The help you provided us during each step of this process made us feel very comfortable and confident we were selecting the right approach to transition our Company.Andy Graham, Vice President, Modern Heating & Plumbing
We knew it would be a difficult task to have someone really understand our business and our market, prior to researching a possible buyer, so it was imperative that we found someone of your caliber, with definite proven experience in this area.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Michael worked tirelessly, He followed every lead meticulously and urgently to make sure nothing was missed.Robert Evans, President and CEO of Mealtracker Dietary Software
T.D., thank you so much! You are a great leader! I love how you are using your gifts and talents to better others. You are clearly a GREAT COACH! This 3 day session undoubtedly changed the future of our business, and very well may have been the sole catalyst to save my company, my health and my marriage! A genuine “thank you” from the bottom of my heart.Bryan D. Horn, Owner, Over Under Clothing
The process was much more involved than I expected and your help, experience and advice was a big factor in making the negotiations go as smoothly as possible.Terry D. Wickman, President, Keytroller
Bruce and I wanted to take this opportunity to thank Generational Equity for assigning Musa Jagne to our transaction. In Bruce’s words, “Musa did one hell of a job for us!”Karen S. Williams, CFO, BW Manufacturing
We are extremely pleased with the way Generational Equity handled the sale of our company. Your associates, Tom and Chris, did an outstanding job of getting us (me) through the process.Michael J Polarek, President, Paragon Packaging
Greetings Mike. Thank you for the captivating and compelling presentation you made at the Phoenix presentation last week. Over many years in business yours was the most informative and well-presented presentation, on any subject, that I have ever attended! Your energy and enthusiasm combined with your concise and captivating support of your positions with easily understood examples and data was compelling.Pete L.
I am pleased that I was able to work with Andrew Byrd throughout this experience. From the first meeting we had in Minneapolis I felt that I was in good hands. His knowledge and expertise is second to none. He guided the process consistently throughout. I feel lucky that I was pared with Andrew and could not be happier that I chose Generational Equity to handle this major life event. Thank you Andrew and GenEq for everything!Eric Erlandson, Owner, Action Fastenings, Inc.
We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).Bil MacLeslie, CEO, ipHouse
I couldn’t have asked for a better team than Michael and Deborah. We couldn’t have done it without them.Robert Evans, President and CEO of Mealtracker Dietary Software
Generational Equity’s assistance was invaluable in compiling and marketing our business.Bil MacLeslie, CEO, ipHouse
Tom Staszak is one of the most professional people I have dealt with in my last forty years of business. You’ve got a great group of people and you have built a truly professional organization.Michael J Polarek, President, Paragon Packaging
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.Bil MacLeslie, CEO, ipHouse
We were happy to see the interest in our company and what we cherished has not just a valuable company but an important company to the communities we served in.Larry Moore, Owner, A Company Portable Restrooms
I must say that I have never worked with a more driven, competent and focused individual as Don Ho.Jay Dinnison, Owner of Sharpe Mixers
I need to say an immense thank you to Don Ho for his stellar work ethic, attention to detail, and tireless effort. Also thank you to the whole crew at GE! Without you, Don could not do such a phenomenal job. We were shooting for closing and funding before the end of 2020, due to the uncertainty of the political landscape and taxes. I am happy to report we closed last week and will be funding tomorrow.Dr. Caty J. Catron PhD, RN, VA-BC – Owner, Vic The Picc, LLC
Dear Chris and Andre, I just wanted to say thanks for all your help. Even though this process was not an easy one, it was comforting to know that I had a capable team standing beside me. You made me feel like we were almost your only client or at least the most important one. Thanks again, and I will recommend your service in the future.Shenille Engelhart, Owner – CLS Technology
We thank you Eric and Generational Equity making our dream come true.Larry Moore, Owner, A Company Portable Restrooms
I wanted to write you a quick letter to express our appreciation and our delight on the outcome of helping us through the process of our recent sale. We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Terry D. Wickman, President, Keytroller
I quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.Jay Dinnison, Owner of Sharpe Mixers
Thank you again for all your guidance and support. Any company will achieve what they intend, if they have you on their team!Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
We will highly recommend Generational Equity and Musa Jagne to any business owner about to embark on the same process.Karen S. Williams, CFO, BW Manufacturing
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