What is happening with the U.S economy? 
Employee Training
Byadmin-hubtek |
6 October, 2022 |

It is evident that recently, many factors in our society are affecting the economy. In this blog we give you the key factors of what is happening with the U.S economy.

We are also coming out of a global pandemic, which has made significant changes to how we live our lives. The website Advisor’s Edge states, “Battered by surging consumer prices and rising interest rates, the U.S. economy shrank at a 0.6% annual rate from April through June”.  

We spoke with experts in our company, and this is what they had to say: 

Joel McGinley, our Managing Director, says that we continue to have a mixed bag in our economy. The latest downturn stems from a number of factors. You’ve got declines in private inventories, residential and commercial building, and the investment in those areas. Government spending is down, state and local spending is down. However, then you’ve got increases in net exports, so there’s a little bit of an offset there. Consumer spending is still strong, and that accounts for 2/3 of the overall GDP. So, it’s a mixed bag right now. 

He thinks there is reason to be concerned, and it really is unclear as to what 2023 is going to bring us, but for right now people are doing OK. He believes there is no need to panic, but that we need to continue to watch how this is going to play out. He concludes by saying that the Fed increasing interest rates is obviously going to slow a lot of things down, but in the end, he thinks that we’ll be fine, and though it will be a rocky 2023, we’ve been in this situation before, and this industry tends to weather these kinds of downturns pretty well. 

We also heard from Geronimo Rodriguez, Growth Master at Hubtek. According to Geronimo, some experts say that we’re in a recession and others say that a recession is not coming. However, when you look at the data, one thing is for sure: we are in a downturn, and whenever that happens people want to save. He says that, for individuals, that translates into more day-to-day saving, making preparations in case they have to face unemployment. 

He continues by saying that companies are also focused on saving, across the board. He thinks it’s very curious that the unemployment rate is at 3.7 percent, and he believes that’s because in 2022 companies can now save on costs in a way that doesn’t mean laying off their workforce. You can implement automation, you can outsource, you can do a lot of things that will keep your productivity up, while also saving on costs. He states that there are companies where the demand is still there for their products, especially if they are a primary product provider, and they still need to keep the production going. He believes the companies that will emerge successfully from this downward trend when the market flips (because it will flip), are the companies that are able to save on costs, but in a smart way. 

Finally, our CFO, Pamela Gutierrez says that worldwide, the economy is contracting, and the United States could not be the exception. She thinks that in these cases, the important thing is to look for innovative solutions that help optimize resources during the recession, and cost optimization is vital. We have had some difficult years lately, which has changed the mentality of people and companies alike. There is a greater aversion to risk, and that trend contracts the market and increases borrowing costs, raising the risk of a recession and rising unemployment. She concludes by saying that she believes the most important thing is to remain positive, and to know that, historically, there is always growth after contraction. The market always finds its balance, and even rises at some point after going through challenging periods. 

Based on our expert’s points of view, what do you think about this? Let us know. 

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