Nothing Is Certain but Uncertainty
That’s the new (or not so new, actually) term the economists like to pull out when they’re talking about the future and what might happen locally, nationally, and globally.
And it’s an effective term, because it works really well. Headwinds slow something down — be it an airplane, a bird, or a golf ball — and you can’t actually see them. And sometimes they come unpredictably and with more force than anticipated.
In recent years, there has been no shortage of potential headwinds when it comes to the economy — everything from debt crises in Europe to gasoline prices (whether they go up or down); from the strength of the U.S. dollar (either growing or declining) to the so-called skills gap and the ability of employers to find good help.
But as we prepare to turn the calendar to 2016, the biggest headwind facing the local and national economy is uncertainty, and it is blowing rather hard. And if there’s one thing business owners hate, it’s uncertainty.
They don’t hate it as much as a long or deep recession, but it’s pretty close. Not knowing what’s going to happen is nearly as unnerving as knowing that something bad is going to happen or continue.
With uncertainty comes a lack of needed confidence, and, as everyone knows, it is confidence, on the part of both consumers and business owners, that dictates the direction the economy will take. And for 2016, there is no shortage of it, and it comes from many directions, such as
• Gasoline prices: They’re low and projected to go lower. That’s good, except that, at some point (and maybe we’re already there), low gas prices begin to be more of a drag on the economy, a headwind, than a benefit;
• Currency rates: The U.S. dollar is as strong as it’s been in a long while. That’s good for travelers but bad for exporters, and that includes many companies in this region;
• Politics: It’s not just a presidential election year, but one where Donald Trump continues to lead the polls and a dozen Republicans are still vying for the job. Almost anything can happen, and it probably will, and, as we said, business owners fear the unknown; and
• Global terrorism: Events such as those of the past month have the tendency to make people pause and wonder what’s going to come next. The current situation is certainly nothing like 9/11, when the entire economy froze and phones stopped ringing in offices across the country, but pauses of any duration are not a good thing.
As we move into 2016, it is our hope that all this uncertainty — all these headwinds — do not lead to an erosion in confidence that can put a damper on a recovery.
As the economists noted in BusinessWest’s annual Economic Outlook (see page 15), the Bay State is on a bit of a roll, and this region, while lagging behind the state as a whole, as always, has put together some solid years and generated real momentum.
It might be difficult for some, but this should be a time to slice through the headwinds, remain confident, and help dictate the course of economic progress rather than wait to see what happens.
But that’s a tall order, because confidence is a fickle emotion, and about the only thing we can be certain of heading into 2016 is continued uncertainty.