2023 Economic Outlook: What Local Businesses Need to Know

12.08.2022 Sara Brasfield3 min

The 2022 calendar year has been marked by high inflation, global supply chain disruption, labor shortages, and economic red flags that a recession is on the horizon. While the U.S. economy has so far avoided any of those feared disaster scenarios, consumers and businesses are far from being able to enjoy any kind of economic stability and confidence in their financial future.

Consumers have responded by attempting to scale back their debt, reduce their spending, and shift more of their money into savings. At the same time, many business leaders are actively adapting their business models with the assumption that a recession will occur in 2023.

If you own or run a local business, proactive planning is one of your best tools to insulate your company from whatever economic uncertainty may strike in 2023. A mix of encouraging and concerning economic signals are making it difficult to predict what may happen in the year ahead, and some businesses and industries may be more susceptible to these variables than others.

As you plan out your 2023 strategy, here are the biggest economic considerations to keep in mind—along with actionable tips to help you strengthen your business in the face of these challenges.

Inflation is Easing—But Economic Growth is Expected to Slow

After months of regulatory struggle to stop its upward momentum, the inflationary period that dominated most of 2022 is finally showing signs of cooling down. Following a series of aggressive rate increases, the Federal Reserve recently announced that its efforts to curb inflation appeared to be working, and that the reserve would likely take a more moderate approach to adjusting rates and managing inflation.

This is good news for businesses struggling with increased operating costs and prices they were forced to pass along to consumers. The bad news? Those efforts to slow down inflation, while necessary, are also contributing to an overall economic slowdown that is likely to become more pronounced in 2023.

While many experts are still projecting economic growth for the 2023 calendar year, this slow rate of growth is expected to place strain on businesses of all sizes, including local companies trying to grow their customer base. In response, local businesses should look for ways to manage or even reduce overhead, and to revise business models to account for more difficulty in growing revenue and profits in 2023.

Recessions Remain a Threat in the U.S. and Abroad

Despite the good news about inflation, a likely economic slowdown could further depress investment markets and push the United States closer to an economic recession. This recession would cause a domino effect impacting local businesses both directly and indirectly.

A potential decline in U.S. jobs could reduce purchasing power for your customers, and make it more difficult to generate sales. This is particularly likely for local businesses in recession-vulnerable industries, such as tourism.

Along with finding ways to reduce overhead, businesses should also invest in strategies to preserve their revenue streams. Loyalty programs and more robust consumer rewards can help lock in brand loyalty and repeat sales, while advertising can help you increase your brand visibility and attract new customers—which could be useful in offsetting business you’ve lost from the recession.

Overseas Events Could Continue to Affect Local Businesses

From ongoing conflict in Ukraine to COVID-19 restrictions disrupting factory production in China, the past year has demonstrated how supply chain disruptions can cause a ripple effect that extends all the way down to locally owned businesses in the United States.

With the current supply chain still not fully recovered from the instability caused by the pandemic, labor shortages and other events, it remains possible that future global events will cause just enough disturbance to frustrate small businesses with inventory shortages, ordering backlogs, and trouble sourcing key materials for your business.

Business leaders can try to get ahead of this disruption by seeking out reliable relationships with suppliers, stocking up on supplies, materials and products you know you’ll need in the months ahead, and using your ad messaging, social media and other communication channels to keep your customers updated on how you’re being affected by these events.

An Economic ‘Soft Landing’ Could Save American Businesses From a Deeper Recession

The Federal Reserve’s apparent success in staving off additional inflation has given economists more optimism that a more severe recession can be avoided. This is great news for consumers, working professionals, investors and small businesses, suggesting that less economic volatility is on the horizon.

While this “soft landing” could save a number of small businesses from the prospect of going under, it may also prolong the recovery from our current period of economic unease. While a more severe recession would have undoubtedly been catastrophic, economists argue that the recovery would have also been faster. By stabilizing the economy to avoid a more disastrous scenario, businesses and consumers are likely facing a more gradual recovery, which could stretch throughout 2023 and beyond.

As you identify strategies to stabilize your business and even drive revenue growth amid economic uncertainty, it’s crucial that businesses understand the value of local advertising to protect your bottom line.

Cost-effective advertising can become a source of revenue generation that helps your business grow its customer base and drive repeat sales even as your competitors struggle to adapt to new economic challenges.

Cox Media’s experts can help your business create digital ad campaigns that are aligned with your business goals and set up for ROI-positive performance, delivering an influx of revenue when your business needs it most. Ready to get started? Contact us today.

About the Author

Sara Brasfield

Sara is the Content Marketing Manager for Cox Media’s corporate team in Atlanta, with a passion for writing and delivering relevant insights for advertisers. With more than seven years of experience in B2B marketing, Sara aims to help Cox Media’s current and future clients connect with their customers find new and unique ways to grow their business. Outside of the (now virtual!) office, Sara loves spending time running, reading and supporting her favorite teams (Go Braves & Gamecocks!).

View All of Sara Brasfield's Blog Posts

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