The chill in the air reminds us that another school year is beginning. Winter will soon arrive and a return to business activities is upon us. With this return to business activities, what are the top economic factors? Covid infections are at the top of our list as a threat to economic recovery. Unfortunately, this is the biggest risk to business flows. The rise in the Delta variant infections threatens economic growth across almost every industry.
Global Hawk Resources strongly recommends to stay informed of infection rates in destination countries and supplier countries as well. The most important factor in the United States is state level actives. Broad lockdowns are not expected to be the key strategy any longer, but rather a focus on vaccination rate in hopes of reducing infection levels.
The good news is the global economy is in fast recovery mode. The challenges lie in limited supplies and raw goods for manufacturing as we move forward into the winter months. Seaborn shipping will continue to struggle with overflows in shipping. Containers and vessels are still the main shortages in this area. There is enough capacity to align with current demands, however there remains a challenge to get back to pre-pandemic flow of goods. Inflations of the new Delta variant will be the main focus as they continue to rise. This of course is fueled by a limited amount of raw goods as we move into the autumn, pre-holiday retail season. Large players will use their clout to make sure orders are fulfilled while smaller players will need to be creative to make sure orders are met.
Unambiguously, this will result in higher prices for the end consumer. The United States consumer prices will shoot up, and Europe will follow suit. Another key factor to keep in mind is labor shortages. These shortages will continue to rise as unemployment numbers shrink, thus again hurting the smaller players. Labor now has better options on employment choice and will chose larger companies with more security and better benefits. A positive aspect during is the large amount of cash savings in many businesses due to low operating costs over the time period of the pandemic.
Businesses need to be aware that these factors are on the way. We need to stay ready. Meaning, we need to insure that cash flow is secure as it is the life blood of any business. One predicator is for sure, we don’t always know what is coming as we have seen over the past 2 years, however we can insure better success by perusing past due accounts and creating process that protect receivables.
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