It’s already May! Now with 2015 quickly approaching its halfway mark, what’s projected for the rest of this year’s economy?
Decreasing Gas Prices
The fluctuating gas prices is one major change that’s really impacted most Americans this year. 2014 closed out with oil falling from $100 to $45 a barrel. This has been a big deal for small businesses that employ commuters, deliver products, or manage transactions overseas; and has caused prices in many industries to fall in order to increase consumer spending.
While gas prices have reduced, the cost of produce, dairy and meat has become exorbitant as water continues to become scarce. For those in the West Coast, the lack of rain is wreaking havoc on many of our budgets, both personally and professionally.
The East Coast isn’t faring much better. The massive and unrelenting storms have caused immense damage economically has well. Many businesses have been shut down due to the extreme weather.
Global Economic Influences
Because the U.S. economy is dependent on the global economy, the financial climates of other countries are directly correlated to our own. According to the Director of Studies at U.K.’s University of Wolverhampton, Dr. Lucy Zheng,“[g]lobalisation has manifested itself through not only international trade but also foreign direct investment (FDI), which has dramatically increased worldwide in the last three decades.”
For example, take a look at investor Arkadiusz Sieroń’s predictions of the potential Fed hike: “This is how markets generally work: investors buy the rumor and sell the actual event. In a sense, the Fed may be forced to hike interest rates since the February report has already caused the rise in market interest rates and decline in stocks prices. It means that global investors are not waiting for the Fed to raise interest rates and are already betting that interest rates are going to increase in the U.S. this year. Indeed, according to CME Fed Watch (on March 19), the Fed’s funds futures contracts suggest a 12 percent probability of a June rate hike, a 49 percent probability of an increase in September, a 70 percent probability of a rate hike in October, and an 79 percent of December rate hike.”
When the public thinks that the economy has a positive outlook, they’re more willing to spend. In a poll taken earlier this month by CNN, they found that, “the public’s outlook for the country’s economic future is remarkably positive. Sixty percent say they expect the economy to be in good shape a year from now, while just 38% say they think it will be in poor shape. That’s the most positive outlook since the height of the 2012 election campaign. Such campaigns typically boost optimism about the economy as people on both sides of the ideological divide believe their candidate will win and ultimately turn things around.”
While the gas pumps have reduced strains on our salaries, the global economy is picking up momentum, and public opinion is at a three year high, those positives haven’t made a big dent on unemployment. According to Fannie Mae’s 2015 Q1 report, “Consumer spending, manufacturing, and job growth have all experienced a loss in momentum recently. March’s job summary from the Bureau of Labor Statistics reported only 126,000 jobs added for the month and downward revisions of 69,000 for the previous two months. March’s job gains were less than half of the monthly average for the previous 12 months (266,000). Hourly wage earnings rose just 2.1 percent year-over-year in March, but the silver lining is in the three-month annualized growth for wage gains, which surged to 4.0 percent in March – the largest annualized gain this expansion has experienced.”
Now how does this information boil down for small businesses? It essentially means that entrepreneurs should be conservative and get a wise team of advisors on their side. If they’re thinking of expanding, investing, or hiring, they should talk it over with their business, finance, and employment attorney first. They can give solid advice in an unstable world.