The New Year... and Beyond

So what does 2009 hold for the economy? 

Andrew Tanzer at Kiplinger.com shares the views of many economists by seeing a rough time ahead:

The U.S. could be in for years of sluggish economic growth because it will take years to flush out the system. Among the main drags on the economy in 2009 (and beyond) is the savage deleveraging of the U.S. financial system and household balance sheets. Deleveraging -- paying down debts -- is an ugly word for an ugly, painful and strongly deflationary process.

 

The nation didn't reach this point overnight. U.S. indebtedness has risen relentlessly for 25 years, and the rate of increase went parabolic this decade, inflated by the mother of all credit bubbles. Wall Street firms, banks, insurers and hedge funds leveraged up with reckless abandon, and now the country's financial arteries are clogged with the sludge of bad debts.

James Pethokoukis of US News believes it might not be as bad as we think:

Let's all hope Barack Obama is wrong when he says that getting the U.S. economy straightened out "will take longer than any of us would like -- years, not months. It will get worse before it gets better." And let's pray that Joe Biden is way off when he says the economy is in danger of "absolutely tanking." But, to be honest, far more economists would pretty much agree with those pessimistic statements than the number that wouldn't. (Though that is a good contrarian sign.) Most regular Americans, too. Still, there are a number of reasons to think that the economy might, just might, shift back into gear faster than most of us think or hope. 

You can find the reasons for his slightly more optimistic outlook here.

Whether you believe the bleak forecasts or the "it won't be quite as bad as we think" forecasts the next year or so will be tough. 

Some small businesses will be relatively untouched by the recession over the coming months, particularly those that provide "value" as a key attribute of their product or service.  But, the majority of smaller businesses will have to shift from a strategy of trying to thrive to one of just trying to survive.

I will offer my outlook for 2009 in my column this coming Sunday in the Tennessean, which I will also post here at my blog. 

Until then, here is my Annual New Year Blessing to Entrepreneurs (with apologies to those in Ireland, to whom this may sound vaguely familiar):

May the market rise up to meet you.

May cash flow always be at your back.

May customers shine warm upon your face,

and opportunities fall frequently upon your venture.

And until we meet again,

May God hold you in the palm of His hand.

Here's to another trip around the sun! Happy New Year!