According to experts from the International Monetary Fund, the global economy is gaining momentum. After a strong year, with global trade and industrial production exceeding projections, worldwide output will beat the 3.5% growth of 2017. Analysts from Goldman Sachs Research actually predict 4% GDP growth in 2018.
That’s all good news, but what will the U.S. economy look like? And how will that impact your business?
William C. Dudley, President and Chief Executive Officer of the New York Stock Exchange, recently gave a speech to the Securities Industry and Financial Markets Association. And his remarks, entitled “The Outlook for the U.S. Economy in 2018 and Beyond,” provided plenty of insights for entrepreneurs.
What’s In Store for 2018?
First off, Dudley says we’re poised for a favorable year, with above-trend growth. Spurred by compensation increases, employment gains, rising home prices, and a healthy stock market, consumer spending will continue growing at a moderate pace.
Of course, America’s fortunes are tied to the global outlook. And, as mentioned above, the global picture is rosy. Recoveries in Japan and Europe, as well as renewed strength in emerging economies, indicate there will be solid demand for U.S. goods and services.
“Putting it all together,” said Dudley, “I have raised my real GDP forecast for 2018 by about half a percentage point to three quarters of a percentage point to a 2½ percent to 2¾ percent range.”
What It Means for You
The pieces are all in place for 2018 to be a strong year for small businesses. Dudley predicts a solid lift for investment courtesy of the lower corporate tax rate and full expensing. Business cash flow is healthy, with the corporate world primed to get a solid boost from the recent tax legislation. Similarly, the reduction of the statutory corporate income tax rate and the 100% expensing provision for investments will lower the cost of capital for business.
The good news about loans will keep coming, as the Small Business Administration (SBA) is reducing its equity requirement for business acquisition loans, making SBA loans even more accessible to entrepreneurs. Also, lending markets continue to offer opportunities for small business owners. According to a report from the U.S. Department of the Treasury, loans from traditional banks are only approved about half the time, while a whopping 70% of loans are approved through a marketplace.
As for hiring, Dudley says that economic growth will cause the labor market to tighten. So look for the unemployment rate to drop below four%, the lowest point since 2000. It should be noted that this scenario would likely lead to some associated wage growth.
In short, this could definitely be your year to shine. With domestic and international economies humming, you’ll have more funding options available. Take a moment to write down your 2018 strategy, paying close attention to the tactics you can use to make the most of this bountiful time.