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The issue: 

Some think a recession is on the horizon.

What we think: 

It wouldn’t be this city’s first rodeo.

Tell us what you think: 

Send us an email at editorial@csbj.com.

Some economists say the writing is on the wall: A soft landing from this tidal wave of inflation is looking less and less likely. Earlier this month, Deutsche Bank became the first major financial institution to predict the United States would fall into a recession, forecasting a downturn would hit in the latter half of 2023. Goldman Sachs economists recently raised the chances of a U.S. recession arriving before 2025 to 35 percent.

A Bloomberg Markets Live survey conducted between March 29 and April 1 found 48 percent of investors expected the country to fall into recession next year. Twenty-one percent were more optimistic about the near-term and predicted a 2024 downturn. Fifteen percent of respondents expect the recession to strike before the end of this year.

But not everyone is on board with the doom-and-gloom scenario. 

Bloomberg reported April 26, “Corporate executives are touting the strength of U.S. consumers in the face of surging inflation, assuaging mounting fears of recession.

“Bank CEOs kicked off earnings season with a consistent message that household finances and demand are in solid shape. Procter & Gamble Co., which counts Tide, Bounty and Pampers among its brands, has seen consumers reaching for premium-brand products. Bank of America Corp. and credit-card giant American Express Co. noted solid travel demand.

“Tractor Supply Co. Chief Executive Officer Hal Lawton was more pointed on the retailer’s April 21 earnings call: ‘Any talk of recession at this point is premature.’”

And earlier this week, in a Motley Fool interview with Bank of America CEO Brian Moynihan, The Fool reported, “For the cohort of customers that had an average balance of $1,400 in their bank accounts prior to the pandemic, that same cohort now has an average balance of $7,400. If you go to the next cohort that had between $2,000 and $5,000 in their Bank of America accounts, the new average balance of this cohort is $12,500. Moynihan pointed to factors such as wage growth and higher savings enabled by limited spending. In the first two weeks of April, Moynihan said spending is growing and was 18% higher over the same time period in April 2021.” 

First-quarter total spending at Bank of America was up 14 percent over last year, according to The Fool, which was its fastest growth since just before the pandemic. Consumer credit is also strong and the nation’s household deposit and cash levels are $3 trillion higher now than before COVID became a household term.

So what does all this mean for Colorado Springs?

While predicting the next recession is like forecasting the weather a year from now, many economists agree: The economy is still hot enough to stave off a downturn in the very-near term. Right or wrong, the impact of the coronavirus, at least at this point, is close to nonexistent in the U.S. and travel spending is on fire. That bodes well for a city like ours that relies so heavily on tourism. And this summer — following two years of suppressed demand due to the pandemic — has the potential to put a lot of local businesses in the black for the year. 

Even better, Gov. Jared Polis recently announced the state’s economy did so well in 2021 that taxpayers will receive $400 by the end of the summer. That doesn’t sound like a harbinger of immediate economic ruin.

But it doesn’t mean businesses shouldn’t be vigilant. The Business Journal ran an online column April 26 by Marc Scudillo, managing officer of EisnerAmper Wealth Management and Corporate Benefits LLC, titled “5 steps to manage surging inflation.” Many of the tips apply to preparing for a possible recession as well, including: 

•  Cut some regular expenses following a comprehensive review, but “Don’t cut costs essential to employee well-being or customer satisfaction,” Scudillo said. “Eliminate things with minimal ROI, cancel subscriptions you barely use, and downsize your office space if necessary.”

• Revisit finances. “This might be a good time to refinance debt on a business loan,” Scudillo said. “Refinancing a variable interest rate to a fixed rate can limit the danger posed by adjustable rates rising in the future. While credit cards should be used judiciously, cash-back credit cards and airline cards can be worthwhile for a business owner. If you’re going to use a credit card, use one that gives value back.” 

• Review business operations. “Review workflows and look to simplify processes. Research software that can streamline customer relationship management, inventory and project management,” Scudillo said.

The next downturn, whenever it happens, will not be a new thing for Colorado Springs. But as it did during the height of the pandemic, our economy, thanks to our large military population, highly educated workforce, and innovative and nimble business community, will likely overperform once again when the going gets tough.