If you’re worried about how long your business will have the specter of a potential downturn hovering over it, the recession talk looks to be here to stay. The U.S. economy contracted for the second straight quarter between April and June, decreasing by an annual rate of 0.9 percent and meeting the mark for an unofficial definition of recession
“To be clear, we are forecasting recession, but we do not have it starting until early next year,” wrote Wells Fargo Securities senior economist Tim Quilan and economist Shannon Seery in a note after the GDP numbers were released. “The strength of the labor market today is the best argument against those saying we are already in recession.”
Although economists surveyed by Reuters had predicted a 0.5 percent increase in GDP during the second quarter rather than a decrease, the decline represents an improvement compared to Q1 2022, when economic activity decreased by 1.6 percent. And the U.S. economy is not technically in a recession until the National Bureau of Economic Research declares one–a process that involves a nonpartisan group of economists examining a wide range of factors. But two straight quarters of negative GDP has long been a working definition of recession and often is a harbinger of the eventual acknowledgment from NBER.
Regardless of the numbers, pessimism is taking hold, as many small businesses report that it already feels like we’re in a downturn. Earlier this month, the National Federation of Independent Business found that small business owners’ expectations for conditions over the next six months hit an all-time low. More than nine out of ten small business owners are worried about the U.S. economy entering a recession within the next year, according to a recent survey from Goldman Sachs.
When the economy contracts, small businesses are often the hardest hit. But while business owners are feeling down about the economic conditions, they are feeling upbeat about their chances to weather a coming downturn. Eighty percent of businesses are confident they can withstand a recession, according to recent research from Kabbage, a unit of American Express which offers small business checking and credit. Founders are feeling upbeat precisely because they have been here before–and recently. The pandemic was the highest cited reason that business owners believe they are in a strong position to survive whatever the business cycle throws at them.