I was struck in a conversation last week with a group of smart business owners – most of whom seemed to think that inflation, supply chain, and labor issues are a short-term blip.
The conversation reminded me of some we used to have at the beginning of Covid, where some thought the Pandemic would be over in a month and life would return to normal.
Let's face it, folks – the current issues we are facing are a BIG ECONOMIC DOMINO of the trillions of dollars that were poured into world economies since the beginning of the Pandemic. This is because so many governments, including our own, acted forcefully and quickly and poured money into economies to keep populations from going hungry.
In my opinion, it will take a long time for the world to find some new equilibrium. I wouldn’t want to be in charge of setting up the economic forecasts for the Federal Reserve. The variables are vast, and we are in unknown territory. There is much more that we don't know than we do know.
Businesses should improve their balance sheets and create as much flexibility and liquidity as possible until the world finds its new rhythm. Again, this is NOT a blip. I just don’t see it.