November 29, 2022
Over the past few months, there has been a bit of talk about the direction of the global economy. During the conversation, many business leaders will express deep concerns about inflation and the onset of a recession. But when asked about their financial performance, most companies say, “We’re doing great!”
Within these conversations there is a clear disconnect between economic expectations and individual performance. Why do you think it’s getting worse when it’s actually getting better? Perhaps it’s a prolonged overheated stock market and an instinctive bit of defensive self-preservation.
Much of what you read about the economy and corporate earnings is based on comparisons to year-over-year results. But my experience is that last year’s numbers are as good as last year’s numbers as they are this year’s numbers. What was last year like? Was it great? Or, at best, was it a year of rebuilding from a poorly performing baseline in pandemic conditions?
Most of the time, reports of price gouging and runaway corporate profits are exaggerated. Indeed, inflationary pressures are driving prices higher, but simply comparing this year’s prices to the previous year’s prices is a gross oversimplification of the conversation.
The final improvement is a combination of both price and quantity variances. After surviving two-and-a-half years of pandemic-driven recession with severe supply chain disruptions, most businesses are back to normal, or what some call the “new normal” of sales volumes. It’s been a while since supply and demand actually approached equilibrium.
At the same time, most businesses continue to benefit from cost-cutting measures due to the pandemic. No wonder inflation-driven price increases are quickly squeezing into earnings. Simply put, business is better.
Quarters of recession without a true recession were followed by quarters of improvement. After several months of price increases, a gradual increase follows. Almost full employment, difficult to recruit and hire. Meanwhile, profits for many companies are higher. Compared to the outlook a few years ago, we should definitely be grateful for the current economic climate.
On the other hand, along with the new normal, there is something called “new networking.” In almost three years of his Zooming, many of us have been Zoomed out. Fortunately, in-person business events are starting to make a comeback. It’s a little different now. After a long hiatus from in-person networking, the biggest difference is that there are many new faces in the crowd. , seems to have changed jobs or moved in another way.
New faces are good. As we reset and reboot in 2023, a whole new generation will come through the workforce. Think about the “weak networking” theory. Essentially, this means that the more you meet people with weaker connections to people you already know, the more likely it will lead to a whole new set of business prospects. With that in mind, you can use her 100 People to Meet in 2023 feature to grow your network and prospects.
We are also proud to introduce Jim McGroslin as our 2022 Virginia Business this month. person of the year. (Read the December 2022 cover story.) McGroslin’s business acumen, achievements and philanthropy are legendary. They make for a great story, and he’s exactly the kind of person you’d want to meet.
As 2022 draws to a close, we can’t help but thank all of our readers and advertisers who have played such a large part in the economic success of the Commonwealth. Business is better for all of us because of you!