Customer small business financing solutions delivered through a single, online application.
Loan Types
Free access to multiple funding solutions
See funding solutions from 75+ nationwide lenders with a single application.
Apply for financing, track your business cashflow, and more with a single lendio account.
Home Industry Trends Did We Avoid a Recession? Some Economists Think So.
Remember the sure-thing recession that economists predicted would happen early in 2023? The new stance seems to be “maybe not.”
That’s what a report from the New York Times indicated this week.
There are a number of reasons cited for this change of heart.
While these are all good signs for what’s seemed to be a shaky economy as of late, a number of economists still look to just one key factor when determining if we’re in a recession: declining Gross Domestic Product (GDP) for 2 consecutive quarters. But guess what? That, too, is a positive number since the GDP grew in both Q3 and Q4 of 2022.
Optimism is always a good thing — and when it comes to consumer sentiment and spending, the US economy is still riding high. In fact, consumer sentiment is the highest it’s been in 13 months and overall consumer spending continues its year-over-year climb. Plus, inflation dropped to 6.5% in December 2022, which was the 6th straight month that inflation declined. Experts at Kiplingers anticipate inflation to hit somewhere near 3.2% by the end of 2023.
Where does this leave small businesses? Most are looking at overall lower operating costs than they were mid-2022 and without drops in consumer spending, both of which add up to bigger profit margins.
Which leaves one last expense to discuss: interest rates. Will they continue to climb?
According to the Federal Reserve, which has continued to make incremental increases to the prime interest rate in an effort to curb inflation and stave off a potential recession, the answer is yes, interest rates will rise until inflation hits something close to that sweet 2% again. We’re not there yet. And, BTW, economists have been questioning for years whether that 2% number is even something that should be targeted … or if it will ever be achievable again.
How will this affect small business borrowing? Interest rates will still probably climb but the impact of a higher interest rate on a business loan now may be offset somewhat by the potential for better profit margins.
Applying is free and won’t impact your credit.
Jeanie Croasmun is a writer, editor, and all-around news junkie who voluntarily (and gleefully!) listens to economics podcasts while she runs. She writes on current issues and other topics related to small business finance for Lendio.
Subscribe to our weekly newsletter for industry news and business strategies and tips
Subscribe to our weekly newsletter for industry news and business strategies and tips.