There are many classic, cautionary tales where things tend to ‘go bump in the night,’ and these scary economic trends are sure to spook any business owner.
The most critical may be shortage of employees. The cost of labor may be in a viscous cycle with inflation. Workers need to demand higher wages as they cannot earn a living wage at current levels with inflation running red hot. Further, policies regarding immigration are having a significant impact on finding skilled workers, especially in the technology industry.
The next most critical crisis may be a significant drop in demand. Already we see major retailers selling off inventory. This will increase as inflation forces people to make choices between necessities and discretionary purchases. This is further enhanced by the mounting debt being incurred by households. Credit card balances are surging, and this will also result in a decline in spending.
Lack of raw material is another large crisis in the making. The frequent sightings of empty shelves at grocery stores have made us all aware of the supply chain disruption issues. Geo-political problems will only exacerbate shortages as countries punish each other. But, global warming is also greatly impacting crops around the world which will result in shortages, less exporting, and higher costs further fueling inflation.
Potential energy disruptions and water shortages due to drought and higher demand will create large problems for businesses. Water allocations are already being significantly reduced for farmers in the West, and reduced water levels in hydro-electric reservoirs may lead to electricity shortages.
