Louis Cannataro, Wealth Management and Business Advisor, Cannataro Family Capital Partners.
“This is your captain speaking. Your ‘Fed AIR’ flight is coming out of the clouds, looking to make that ‘soft’ landing we were hoping to deliver. As we try bringing this plane (the economy) in for a landing (back to ‘normal’), conditions on the ground have changed—to say the least. I want to remind you the fasten seat belt sign is illuminated. Please return to your seats, and buckle up.”
I can hear that reassuring voice of our hypothetical “captain” (the Federal Reserve), filling us in on the election, national debt, Ukraine, Russia and Israel, never mind inflation and the potential for interest rates to stay higher for longer as our phones endlessly ping.
All this news and information can be quite overwhelming to us “passengers” (those of us living and working in the U.S.). However, as always, the captain will also remind us that we are doing our best to arrive safely, even if the landing of our flight may be choppy and some of us may need that “little bag” in the pocket in front of us.
Turbulent Descent
Everyone is buckled up. You will see some are sleeping nicely on our descent, while others are white knuckling this landing and looking over in disbelief at those seemingly not worried. They are thinking those “unworried” are simply “unaware” of what is going on in the cockpit and on the ground. The passenger conversations and pontifications of other “captains of the market” go from one extreme to the other, with the “This time is different!” message once again rising to a crescendo.
Our economy has not had a recession since the Great Recession. Well, we had one for two months after Covid hit, but once the Fed took interest rates to zero again and we passed the short-term noise regarding the uncertainty of a timeline for a Covid vaccine, the economy began to thrive once again.
In my opinion, our country needs a recession because that is part of the normal business cycle. Covid brought importance to staying “as normal as possible” in a very abnormal moment in time. The goal was no longer to excel but to simply stay afloat. Proper protocols for school, work and business were put aside to accommodate an economy and workforce that were never told before to simply stop. Then the green light was given to begin to move forward but still operate remotely with minimum in-person contact as the engine was slowly brought back up to full speed.
Unfortunately, Covid created a mass exodus of more experienced workers. These individuals had the proverbial and much-needed 10,000 hours of experience. They either retired early or drastically disconnected from the office simply too soon. Of the remaining workforce, those who could do their jobs remotely were exposed to a work environment that initially told them: “Yes, stay/work from home. You can be efficient and effective with minimal in-person coaching and guidance from your leaders.”
This has now left us with a less experienced workforce, and according to a 2024 Gallup report, “compared with 2020, employees still feel more detached from — and less satisfied with — their organizations and are less likely to connect to the companies’ mission.”
After the Great Recession, the Fed propped up the economy and the market with unusually low interest rates for over 15 years and with low inflation until 2021. The success and wealth of the Baby Boomer generation before us have allowed all involved to wallow in this mediocrity, but this high-flying economy can no longer be artificially maintained by the Fed. The headwinds are getting stronger.
‘Touch And Go’ Landing
A new era of normal interest rates and a market driven by business acumen must begin to flow so this country can begin a new cycle of growth and prosperity. I believe that a recession and new tide of progress will rejuvenate the need, and hopefully desire, for hard work and dedication to being the best at what we do.
It is our turn now to create a difference in the economy and our lives. Then and only then can we and our economy reset to begin another period of growth and prosperity. I do not think the recession would be long and deep, and if we refocus on hard work and competitiveness, we will propel forward quickly.
As our plane flies through all this current turbulence, there needs to be a reset on our willingness and aptitude to once again lead this world economy. When the data finally shows us that a recession has begun, we want to have already prepared for the next takeoff.
Business owners, C-suite executives and their workforces must return to the field (the office) and begin working as a well-integrated crew. Experienced and dedicated executives must lead in person by example. Those new to the crew must be able and expected to learn all operating procedures, flight plans and preflight checklists. Mediocre performance can no longer be expected—never mind accepted—in this upcoming post-Covid new business cycle.
Covid affected so many aspects of our lives and work. For an unprecedented moment in time, a “time out” was called and then “slow go” was needed and deployed. During the pandemic, workers were out weeks at a time, some products and services were nonexistent, then delayed, and when finally delivered, lower quality and workmanship were not only tolerated but even expected “due to Covid.”
In my opinion, no crew member can perform at their best working from home or showing up only three days a week. In this current late-stage business cycle, we can and have gotten away with “Covid-like” efforts. That flight is coming in for a landing, and all Covid-like efforts must now be eliminated.
A recession would quickly become a wakeup call for those still stuck in the Covid-era mindset. At the same time, a recession would likely also provide unprecedented opportunities for businesses and employees already in the process of reclaiming their pre-Covid work ethic and commitment to excellence.
Those companies and their workforces that dominate in retooling their efforts and actually want to thrive and dominate their fields will be able to perform a “touch and go” landing. This is the proverbial moment in time when businesses and their workforces must simply “get on the plane.”
In my next article, we will climb into the cockpit to listen to the flight crew chatter and view the flight “indicators” as we come in for our landing.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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