A recession might actually help small businesses, says Gene Marks, Founder of small-business consulting firm The Marks Group and opinion contributor for The Hill, CNBC, and Fox Business.
Marks says that many of the experts and analysts he follows see “darkening economic clouds on the horizon” that indicate a recession is looming. He cites that both Goldman Sachs and Deutsche Bank believe that a recession is coming in the next few months, which is substantiated by low expectations among small business owners and low consumer confidence. However, Marks says that a recession is nothing to be afraid of, and that it could, in fact, help small businesses by lowering prices and cutting labor.
“A recession is coming. Maybe it’s already started. But the smartest small business owners aren’t panicking,” Marks says. “That’s my hunch and it’s based on a lot of strong anecdotal evidence.”
A slowed economy, Marks says, means that supply shortages will even out as demand drops. And as the supply shortages even out, the supply chain issues will resolve, leading prices to stabilize. This will also partially take care of inflation, he adds, as historically that’s been the case; he cites the recession of the 1980s, in which low unemployment pushed up consumer prices, and high unemployment bought inflation down.
The other facet of a recession that will alleviate high inflation rates are wages. During recessions, he says, companies love to “cut their payroll fat” – which couldn’t happen during a pandemic, as it would cause them to “look evil.” Marks also criticizes the one million work-from-home employees who began side hustles during the pandemic, saying that they only did so because they had “too much time on their hands.” And as their businesses scale back and layoffs begin to happen, a survival of the fittest-type evolution will occur, and the current issues in the market will correct themselves.