b'THE OFFICIAL NFBA MAGAZINEMay 2023 Published by ITR Economics Macroeconomic OutlookIndustry Snapshots Uncertainty pervades the headlines, from bank failures to the debt ceiling debate to the ultimate trajectory of Federal Reserve interest Arrow denotes 12-month moving total/average direction. rates. Where is the economy now, and where is it headed? As always, we look at what the data suggests: Consumer spending: US Total Retail Sales in the 12 monthsthrough April came in at 7.1% above the year-ago level, but growthRETAIL SALES is slowing. Consumer loan delinquency rates are around the five-ECONOMIC UPDATEyear pre-COVID average and well-below pre-Great Recession levels,but they have risen sharply in recent quarters.WHOLESALE TRADEManufacturing: Both US Manufacturing Production and USNondefense Capital Goods New Orders are above year-ago levels,though the annual trends have begun to stagnate in recent months.Supply chain pressures are easing, allowing manufacturers to workAUTO PRODUCTION through backlogs. However, looser supply chains may also indicatewaning demand. Keep your inventories lean. Pricing: Some commodity pricesafter rising in prior monthsMANUFACTURING following Chinas reopeninghave begun to decline again; we arealso seeing mild decline in quarterly US Producer Prices and easinginflation in US Consumer Prices.While recession is quickly approaching, there are still actions ROTARY RIG your business can take to be prepared for the upcoming downturn.CAPITAL GOODS We are anticipating a mild recession next year as consumers continue to tighten their belts, credit conditions deteriorate, and industrial sector backlogs dry up. The timing and severity of recession will likely vary by sector. Businesses that boomed due to NONRESIDENTIAL CONSTRUCTION stimulus- and shutdown-induced activity are likely already feeling pain, and that pain is likely to persist in the upcoming recession. Other industries, such as food, healthcare, medical, and defense, will likely fare relatively better, given the shift toward consumer RESIDENTIAL CONSTRUCTION staples and, for defense, elevated geopolitical tensions.While recession is quickly approaching, there are still actions your business can take to be prepared for the upcoming downturn. Look to build a cash buffer for your business. Cash has a variety ofuses in a recession, from insulating your business against elevatedSteepMild Rise Flat MildSteepborrowing costs to serving as a stopgap should orders slow andRise Decline Decline backlog diminish. If you are able, look to shift your product mix toward lower-costalternatives; if not, ensure you are actively communicating why yourproducts or services are worth the higher price. While your employees will likely experience elevated uncertaintygiven news of layoffs and the like, look to assuage theirfearstransparency can be an effective strategy during times ofuncertainty.Finally, lead with confidence. We expect that the upcoming contraction will be more akin to the mild recessions of the early 1990s or early 2000s than the Great Recession.ITReconomics.com 2023 All Rights Reserved 134 / FRAME BUILDER - MAY2023'