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When driving back from Palmerston North on Monday I was listening to a business report on a downturn in confidence in the service sector.
The "R word" (recession) wasn't mentioned but the commentator in one breath said that we shouldn't jump to conclusions and in the other said "this will be interesting to watch over the coming months".
While market analysts will continue to hedge their bets, there are signs of change on the horizon which could flow right through to us – starting with future rounds of trade tariffs from "the big orange" in the United States and what appears to be the beginning of a softening in commodity prices.
Unfortunately, globalisation and the interconnectedness of people and markets mean that when negative change occurs it moves fast and affects can spread widely. It is important that we don't get sucked into the belief or assumption that nothing is going to change.
Buddhists have a term which I like – Impermanence. And there is a sense of impermanence in markets which can and should be applied to business thinking – particularly when planning.
Inherently I remain positive about the future but in times of uncertainty we look for leadership and confidence from policy makers. This includes delivery of policy and how markets in interpret these actions.
On the local side, it would be good to hear what is planned for managing inflation and interest rates – which both flow through to businesses. Internationally, Brexit and the exclusionist policies of the United States (regardless if you agree with them or not) will impact world markets and flow through to local businesses.
Should the environment change for the negative, the outward aspects of a downturn after a period of growth are essentially contraction and reduction. Economists call this by many names, such as "realignment", "market adjustment" for example, as the intangible economy swings back and forth – the hope being that the movements are not wild changes like we saw in 2008.
These are interesting times and we are seeing unprecedented volatility because of political shifts altering world economic foundations and those in our own country. It is no wonder that business confidence overall is on the "nervous" side. And we haven't really started the conversation on the economic opportunities and cost associated with Climate Change, for example.
In amongst all of this we have the Whanganui economy, each day, going out to better its competition through guts and determination in an often inhospitable environment. I have often advocated that small businesses and small economies are where 'real' antidotes to downturns come from and remain so.
However, small economies are often populated by small to medium sized local businesses and these, effectively, take a higher level of risk. If a small local operator experiences difficulty, including those which are environmental, that might mean his or her livelihood.
It's great to see brave, local entrepreneurs stepping up to the plate and opening new businesses or investing in current businesses.
Likewise it is sobering to see doors close on established businesses. Those who are prepared to take the risks, especially in the times we are in, need to be both congratulated and supported.
Balance Consulting is a Whanganui consultancy specialising in business strategy, process excellence and leadership mentoring — contact Russell Bell on 021 2442421 or John Taylor on 027 4995872