This article was originally featured in the South Florida Business Journal.
With the novel coronavirus pandemic mounting worldwide and businesses reporting widespread disruptions, as a US business owner, do you stay calm and carry on or do you batten down the hatches and prepare for the worst?
While we have been enjoying the longest economic expansion in economic history, recent dramatic stock declines insinuate deeper concerns. Bloomberg’s economic model predicts a 53% chance of a US recession, the highest reading since we exited the Great Recession, while JP Morgan interprets the probability at 90%. “I think it is very difficult to avoid a recession. The depth of the recession will depend on how the [Trump] administration reacts,” said Moody’s Mark Zandi, on CNBC on Monday.
And when all three of the top consulting firms with some of the smartest collections of business thinkers in the world are sounding economic alarm bells, it’s time to heed their warnings.
A wait-and-see approach is often the most damaging move in uncertain times, Bain & Co. said in a recent article.
Bain now rates the threat a 6 (on a 1-10 scale), and warns that by late-March it could be raised higher recommending the activation of second-tier contingency procedures, such as deferring nonstrategic investments and implementing operational and financial preparations consistent with a 2-to-3-quarter recession.
While it’s too soon to know the extent of the economic blow the global outbreak will have, the current psychology of fear only increases the chances of broader contagion to other industries. Companies should act immediately to protect their employees and should start bracing for a broader recession.
We have also curated some of the best articles we’ve encountered regarding how to best navigate the near to mid-term environment: