Most business are pro-cyclical, meaning that their success and viability is likely highly positively correlated to the strength of the economy. As such, if the economy does well, most businesses will benefit.
However, in today’s business environment, a host of new challenges are confronting many businesses, despite the fact that U.S. businesses (in aggregate) have recently been achieving record profitability. Many of the challenges confronting businesses are seen in the business surveys and other sources seen on the “Business Conditions” page.
One condition that seemingly lacks recognition – yet is highly material – is the continued “lagging” nature of revenue growth. Another highly recognized problem is weak aggregate demand.
Here are some of the other “problem areas” and challenges businesses are currently encountering:
- Global Economic Instability
- Slow U.S. Economic Growth
- Economic Uncertainty
- Uncertainty Regarding Taxes And Other Government Policies
- Intense Price Pressures
- Intense Competitive Pressures
- Rapid Technological Change
- Poor Employee Morale
Many of these “problem areas” and challenges are formidable, as they are either new or pronounced relative to past levels. As such, solutions to these problems are often not readily apparent, and can vary widely among different companies and industries. As well, solutions that are in the best interests of business, from a long-term perspective, can be especially challenging to both determine and enact.
Of course, of great importance is the economic environment going forward. While a strengthening economy might alleviate some of these problematical issues, it appears that many companies have failed to appropriately consider – and plan for – a considerably weaker economy.
While the consensus among economists and other professionals is one of continued slow (U.S.) economic growth extending forward for the next few years (i.e. the economy won’t considerably worsen going forward), should this “slow growth” fail to materialize, businesses will be presented with additional, complicated challenges.