2015 brings with it a new flurry of activity and hope. While many Americans believe the economy is still in a recession, the Great Recession actually ended in 2009. Since then, the country has made gradual improvements to strengthen our outlook, but not all may be rosy this year. We identified three economic factors that will have impact in 2015:
Health care is changing and the cost structure affects both small businesses and providers
Small business already pay more for health benefits for their employees, simply because they don’t have the buying power of big business. They may pass this cost onto their employees, making them less competitive in the marketplace and thereby more of a challenge to retain good talent. In addition, small medical practices will be hurt by the Affordable Care Act. We should see many smaller medical practices close or begin to close.
Did you know we worked on healthcare this year? And we did it using our standard fixed fee approach. Ask us about it.
The oil industry is in a slump
Lenders will see companies cut cost in the short term as inventory is squeezed and liquidity dries up. This is temporary; by the end of 2015 prices for energy will rebound. Only the smallest and riskiest of companies associated with the oil industry will be negatively impacted.
Banks are lending and will continue to lend…but we’re not out of the woods yet
After the recession, we saw lending requirements tighten. In 2014, we saw some of those restrictions begin to loosen, leading to growth in loan portfolios (and so begins a new cycle of loans that will not be repaid). However, capital will still be scarce for troubled companies such as service companies and distributors.
Did you know we often serve companies who have trouble obtaining capital? Contact us to learn more.
And a few other items worth noting:
- Consumers are saving and spending. According to Brian Brian Moynihan, CEO of Bank of America, “consumers spent 4% more on non-gas related purchases with BofA credit and debit cards than a year earlier.” (Source)
- Industrial output is at pre-recession levels and continues to grow. Increased consumer spending contributed to an increase in industrial output, which late last year saw the biggest increase in 16 years.
- Interest rates will rise in late 2015 and trend in 2016. The Fed has indicated it will “wait patiently for the right time” to introduce a change.
- Labor rates will increase and employee turnover will continue to grow. For the first time in awhile, employees have enough leverage to negotiate their wages.