This has been “one of those weeks” for the business world. We all woke up on Tuesday with fears that the markets were in for their worst performance since the crash of 1987.
Yet, by Thursday, things had stabilized and were back to our “new normal.”
The Business Acumen to Know about this Economy
There have been several significant things happening in the business world that led to the events of Tuesday including:
- The Federal Reserve's decision not to cut interest rates
- Last week's unexpectedly poor jobs report
- Slowing consumer spending
- Warren Buffet’s reduction of his Apple holdings
- The naming of the Democratic VP candidate
- The continued tensions and escalations in the Middle East
That is a lot of drama in a relatively short time amount of time and the biggest take-away should be how incredibly resilient the markets have been. Despite all the negative things that happened this week there is strong confidence, which is most likely being supported by several things we know are going to happen over the next few months including:
- Interest rate reductions will stimulate the economy
- The US election will be over
- Summer vacations will be over and everyone in the business world will be focused on closing the year strong and getting off to a great start in 2025
- The “AI hysteria” will level out
- Global economic fragmentation will become more prevalent as geopolitical tensions and supply chain disruptions will lead to a more fragmented global economy.
All of this leads to one significant conclusion: the global economy is foundationally strong and more importantly, may be more resilient now than ever before. If you are in business, there are three things you must know about thriving in a resilient economic environment.
A resilient economy can offer several benefits to business decision-makers:
- Stability During Crises: As we saw this week, a resilient economy can better withstand and recover from shocks such as financial crises, natural disasters, or pandemics. This stability helps to minimize disruptions to daily life and economic activities, ensuring that businesses can continue to operate, and individuals can maintain their livelihoods without worry of financial devastation.
- Sustainable Growth: Again, as we saw this week, resilience often involves building systems that can adapt and evolve. This adaptability raises long-term sustainable growth by enabling economies to adjust to changes in technology, market conditions, global trends, geopolitical issues, and weather conditions rather than being derailed by them.
- Enhanced Investor Confidence: As the week ends on a high note, it is clear that when an economy demonstrates resilience, it can boost investor confidence. Investors are more likely to commit capital to a stable and adaptable economy, which can lead to increased investment, innovation, and job creation.
In summary, it should be obvious that there is no need to panic. There will be some rough spots, but right now even when some significant negative things impact the economy and investor confidence it will come roaring right back.