What is your outlook for the next recession from a small business perspective? originally appeared on Quora: the place to gain and share knowledge, empowering people to learn from others and better understand the world.
Right now, small businesses aren't particularly concerned about the potential onset of a recession in the near-term. Less than a third (31%) say they expect there to be an economic recession within the next 12 months and only 13% say their current view of the economy is worse than this time last time. Conversely, 41% have a view of the economy that's better than a year ago and more than half (54%) call the economy today "good" or "excellent".
That said, the next recession, whenever it does come, will probably be tough to respond to. That's for three reasons:
- Interest rates are already so low (the headline Fed Funds target stands at 2.5%), depriving the Federal Reserve of a primary recession-fighting tool of rapidly and substantially cutting interest rates.
- The political consensus needed for fiscal stimulus seems unachievable in current political climate.
- And even if there is a political consensus on the optimal fiscal response, is now lower (especially post-2018 tax cuts) than it was prior to the onset of the Great Recession in 2007.
And as a final note of caution for those thinking about starting new businesses, the last recession was particularly tough for entrepreneurs, with the number of new businesses started and these numbers have yet to return to anywhere close to pre-recession levels. Unfortunately, the next recession could lead to similarly large drop offs in new firm creations.
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