Five economic forecasts for small business in 2019

A decade ago I probably would have said that there is little value to a small business adviser in attempting macroeconomic and political forecasts. But over this most recent decade I’ve watched shifting macroeconomic conditions wipe out over two million dollars of personal net worth and put one of my businesses into idle for over six years. Now I would say that it make sense to tackle business planning only after reaching an understanding that these operational plans are based on a preconceived economic forecast that may have a large impact on business success. Some might rephrase this concept as “a rising tide carriers all ships” or “a falling tide carries all ships” – a concept introduced to me by my first business mentor David Mallach at Merrill Lynch while I was still an MBA student in Philadelphia in the early 1980s. It might have taken longer than he expected, but I am finally learning this lesson.

My 2019 business plans were built on these five macro-economic assumptions:

1. INVESTMENTS – The stock market performance will remain unimpressive and continue to accrue losses on a downward trend throughout the year, opening the door and raising interest in alternative investment strategies for those who want to build long term wealth.
2.  SUSTAINABILITY – The portion of people who adopt the belief that  sustainability, technological adaptation, the Green New Deal, climate change response, infrastructure adaptation, or whatever we want to call it, as their primary political and investment focus will increase. More people will understand and embrace the concept that an investor can “do well by doing good”. But the reality is that most of us don’t even see the tip of the change that is ahead.
3. POLITICAL DIVISION – The federal government will remain in a state of unprecedented chaos with increasing public expectation that the president will not finish his current term in office. Our citizens will remain deeply divided, even pulling further to opposite extremes, making it difficult for an adviser to serve clients who do not share similar world views.
4. HEALTH CARE – The need for financial and legal advice among those who face immediate and financially life-altering health care cost financing decisions will increase. For all practical purposes, this is still a non-existent professional market with significant risks for early adviser entrants.
5. TAX PLANNING – Interest among affluent individuals, professionals and small business owners in engaging an adviser for the purpose of reducing tax liabilities will remain weak, following the trend observed historically that it takes small businesses longer to embrace the changes of the 2017 tax reform law. It will take more than another year before the median potential client fully understands and decides to take action based on current tax laws.