So this is not a fun article to write, for our small and medium sized business owners, but here we go!.
We have a huge recession coming this fall and there is nothing we can do about it!.
We are almost living true a perfect storm right now, anybody remember Bodhi (Patrick Swayze) from Point break?, waiting for the perfect wave when the perfect storm hits.
As you see on this picture a gallon of gas was 2.29 a few years back, now it has more than doubled in price, in some places like in California it has trippled in price.
Just this fact alone creates huge price increment on all goods that needs to be shipped to stores and consumers.
And everybody using a car is effected badly from this price hike.
This is one wave of the perfect storm brewing.
The second wave is the heating costs in the winter and the cooling cost in the summer.
These bills in June 2022 are just insane for most consumers.
And there is not a lot you can do, about it!.
Food costs are a very serious issue for most working and middle class families.
What worries even more is that most families have tapped out all of their Covid-19 savings and are putting in all on plastic these days.
And you can do this for awhile but the bills will start stacking up and the credit card interest is usually on an average 15%+ , so that is not a good long-term solution.
There was over 212 million new credit cards issues in May of 2022 in US alone.
So saying that a huge recession is coming is not an understatement.
These are the few things on the personal level that effects everybody.
What is even more worrying is the component and raw material shortages that a lot of businesses are suffering from at the moment globally.
It is not even the inflation with over 30%+ price increments that are the big issue, simply put you can not get a hold of raw material and components.
Many components are today on back order for next summer 2023, and that makes it very difficult to operate a small to medium size business.
For instance we have helped two clients this spring with cast iron sourcing when both Russia and Ukraine can not currently supply any of these very much needed raw materials.
We found suppliers in China and Brazil but the price was 25% higher and the delivery time was longer.
So they can continue their production but the customers have to pay 25% more for the same goods.
When we talk about the perfect stort brewing here are the other waves forming at the moment.
Also a lot of people have invested heavily in the crypto world and in NFT:s and depending on timing of these investments many have lost anywhere from 30-99% of their investments in a short period of time.
So this also puts a very bad strain on the consumer index.
The stockmarket also taking a huge dive with the tech stocks leading the way, we have seen 30-40% drops from the start in January 2022.
So this means that people will tighten the belt more for each quarter as we go.
And we foresee a lot of restaurant’s and shops going under, due to a very low consumer spending starting in August.
Most people will try and enjoy the summer of 2022 and we will see a big decline in streaming services add ons, and general consumer spending starting in early September.
We have also started to see the housing market cool off quit a bit and if you are in a market for a house, check out our check lists on what you need to know and what you need to do, prior to buying a home, you find it in our shop in the link below.
Today a lot of first time home buyers wish they would have use this checklist to make sure they dont make any irrational home deals.
We have seen certain markets drop by over 30% in Toronto and in many places across the US, from the starting prices in January 2022
We have also started to see freezes in hiring at many companies and Klarna laid off over 10% of their staff last week!.
So let us put it all together for what is to come, when we talk about the perfect storm.
No3:Heating and cooling costs.
No4: Global Food shortages due to the Russian invasion of Ukraine.
No5:Components on back orders.
No6:Food prices going true the roof!.
No7:Lower consumer spending, the US economy is a 2/3 consumer spending based economy.
No8:Lay offs and companies closing and going under.
No9:Cooling off in the housing markets globally, many markets are selling 30% below January 2022 prices.
We are currently working day and night with our smaller business owners to help them prepare for what to come in the fall!.
With our medium sized business owners and hired management we are providing help with sourcing goods and material across the globe for them.
So if you are a business owner we have calculated that the inflation will slow down by December 2022 and from January 2023 we will start to see stagflation instead.
The component shortage will be around until the fall of 2023 so more than 17 months from today.
So it is time to brace yourself for impact very soon as a business owner, and try to stay a float if you can.
As always we are here to help you as a client, just send us an email if you want a special package that you can not find in our shop.
Also if you are trying to lose-weight and get in shape we can strongly recommend one of our clients programs.
You find them here https://lose-weightcheap.com/shop/
Take care everybody.