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How Businesses Can Manage the Slowdown in the U.S. Economic Recovery

  • Several factors have been contributing to a slowdown in the United States economic recovery
  • Economists writing for the Harvard Business Review suggest that such a deceleration is normal for a V-shaped recovery, and that many challenges are short-term or less severe than they might seem
  • Businesses advised to take a broad approach in developing strategy rather than trying to keep up fluctuating market trends

Summary by Dirk Langeveld

Several factors have been contributing to a slowdown in the economic recovery in the United States, raising concerns among business owners about their short-term prospects. A group of economists from the Boston Consulting Group’s Henderson Institute, writing for the Harvard Business Review, suggest that this deceleration is to be expected and advocates that company leaders not be rash in reacting to current conditions.

The authors say the U.S. experienced a V-shaped recovery from the initial shock of the COVID-19 pandemic, and that this trend traditionally involves rapid growth that soon becomes less pronounced. It anticipates that the nation’s growth in 2022 will slow to 2.9 percent, which is still stronger than usual while not risking an overheated economy.

  • Several factors have been creating challenges for businesses, including supply and labor constraints, the spread of the COVID-19 Delta variant, lower consumer confidence, and the diminished effect of economic stimulus passed earlier this year
  • The authors suggest that many of these factors are less severe than expected, with consumer activity remaining strong during the recent surge of COVID-19 cases and higher compensation helping to offset the fading effect of stimulus payments
  • Inflation is expected to ease as issues like supply chain bottlenecks clear up
  • With unusual market fluctuations related to the pandemic, the authors advise companies not to make premature decisions such as major price hikes; they anticipate that hiring challenges and inflation will ease in 2022
  • The article suggests that a broader interpretation of conditions is a better way to approach business strategy, with a likelihood for economic activity setting above pre-pandemic levels and a growth of both wages and productivity

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