By Doug McPherson
As National Golf Day (May 8th-10th) is upon us, we felt it was a good time to talk with an expert about the economy and how it’s shaping up for small business owners like yourself. We hit up Holly Wade, executive director of the National Federation of Independent Business’s research center, with a few questions―the answers to which we hope might help you plan for the coming months.
Reports say small business owners have pessimism about the economy for the first six months of 2024. What’s their mindset for the rest of 2024 and perhaps beyond, to 2025?
HW: Yes, small business owners have been generally pessimistic over the last three years mostly due to how difficult it’s been to operate a business amid high inflation and labor shortages. Also in the mix are mounting challenges related to real estate and higher interest rates. The perception that high interest rates would start tapering off to some degree in 2024 are now fading. Financing costs are likely to be higher for longer given the Federal Reserve’s reluctance to cut rates without a clear path to their 2% inflation rate target.
What good news might small business owners have to look forward to in the coming months? Is there any relief in sight, and if so, what is that relief?
HW: The good news predictions on the inflation front have eased a bit lately as the last mile has become sticky. Getting prices back down to more manageable levels, or as the Federal Reserve has deemed their target of 2%, is slow going, and painfully slow going for many small businesses. However, the good news is that the economy has avoided a recession so far. Consumers continue to spend, and that’s been key to supporting most small businesses across the country. In addition, it also appears that labor market conditions are easing for some owners. Owners still looking to fill open positions are reporting more applicants and that’s good news.
What trends are you tracking now that might impact the way golf course owners do their job going forward?
HW: The trends that we’re following are the increasing levels of consumer debt that could start impacting discretionary spending and the number of job openings. The ratio of those unemployed and job openings has narrowed over the last few months where there is roughly one job opening for every person looking for employment. This should start easing wage pressures and hopefully create more balance in the labor force, easing some of the stress felt by small business owners over the last three years.
What, in general, do golf course owners need to be aware of in the coming months related to inflation, financing costs, labor and any other economic issues?
HW: It looks like the Federal Reserve will likely keep interest rates higher for longer to achieve their 2% inflation target goal. Financing costs will continue to be more expensive at least through the end of the year even if the Federal Reserve starts cutting rates this year. Rate cuts are expected to be few at most and small, not enough to meaningfully move the needle.
Given the current state of the economy, what are your best points of advice for course owners–what can they do in their day-to-day job to make it through this particular economy?
HW: Given all the challenges with operating a business these days, it’s always good to check in with the owner’s banker to talk about their business, potential financing needs, anything that might come up so that they’re better prepared for potential changes in economic conditions in the next 12 months.
NOTE: Some of Ms. Wade’s answers have been edited for clarity and brevity.