A new strain of COVID is making the rounds. New hires are hard to find. Existing workers aren’t thrilled with coming back to the office, at least full-time. The supply chain is uneven, as are prices. And businesses are trying to balance customer fears with the need to return to normal.
And yet, amid record unemployment, Americans were still able to pay off $80 billion in credit card debt in 2020 and another $56 billion in the first quarter of 2021.
According to Moodys, the country is about 93% back to normal. Some economies, Florida, South Dakota and Idaho, for example, have come back stronger than they were before the pandemic. Washington, for its part, is mirroring the U.S. average as of June 15.
A Rubik’s Cube Economy if ever there was one.
If you recall, a little more than a year ago the economy was chugging right along. There was still a lot of work to do, but all the pieces of the puzzle seemed to be falling into place.
Then, BAM! A global pandemic spread like wildfire. Every side of the Rubik’s Cube twisted and turned in a flurry of stay-at-home orders, remote working mandates, industry closures, masks, triple masks, bogus cures and suspect remedies, runs on toilet paper, then hand sanitizer and even meat.
Our modern economy has never seen anything like it. Nearly a quarter of all Washington small businesses closed their doors, either temporarily or permanently. This happened in months, not years. Parts of the economy – notably travel, tourism and hospitality – shut down virtually overnight. The data at the time pointed to all sorts of possibilities as we moved toward an eventual recovery, few of which came true. It’s as if all the so-called experts and pundits were using Ouiji Boards to find an answer, any answer.
Certainly, the past 16 months have put a spotlight on some of our economy’s glaring weaknesses. Once a pathway to peace and prosperity, the global supply chain showed it couldn’t handle significant disruptions. Worse, starting the supply chain back up again has become problematic, as ports, still not fully open, back up with container ships waiting to load and unload their cargoes.
A stellar example of supply chain issues is the shortage of computer chips that run everything from coffeemakers to cars. The raw materials required to manufacture these have not caught up to demand yet, and manufacturers are struggling to reactivate production lines that were closed. What took days or weeks to close may take months or even years to return to full production.
I never mastered the Rubik’s Cube. I could never get all the colors to line up perfectly. Frustrated, I resorted to peeling off the colored stickers and sticking them on the side they belonged so I could consider the puzzle solved. If only we could do that with our economy. Unfortunately, it has to be realigned one square and one side at a time until the economy is chugging on all cylinders again.
So, what does this mean for small businesses around the state? For starters, the global economy is going to take a while to restore its operations. So you’re going to have to improvise for a while. There may be temporary product shortages. You may be periodically out of stock of one item and overflowing with others.
You’re going to have to think locally or regionally as well as globally. You may have to find new suppliers, or you may have to become your own supplier, venturing into manufacturing. Credit may be a bit more challenging to get, so you may need to tighten terms with your customers so you can maintain a decent cash flow for your operations. There may even be future disruptions to deal with should a new strain develop that current vaccines can’t handle easily.
Through this all, know that these times, the next two to five years, will hold the promise of unparalleled opportunity. Historically, we have come out of periods of scarcity and uncertainty only to celebrate with reckless abandon because we dodged another bullet. The end of the 1918 pandemic and World War II are shining examples of how things could play out. It was a carnival of consumption, as one historian puts it.
Not that there aren’t challenges facing communities everywhere. A potential housing crisis looms, with the current shortage of available homes, rent moratorium and increased demand. Homelessness continues to be an issue in many communities, long-term solutions still waiting to be discovered for families and those facing mental health or addiction issues. Equity, access and opportunity continue to be a challenge statewide.
As business owners, this is perhaps a once-in-a-lifetime opportunity to step up to the plate, try something that carries a bit more risk than you’d usually tackle, jump into emerging markets to address unmet need and invest in workers as human and intellectual capital, not just a warm body that shows up on time.
It’s been half a century since Americans have seen an extended period where the economy was running on all cylinders. There may never be another time like this, at least one in our respective lifetimes. Federal relief programs, new business models, pent up discretionary income, and a desire to celebrate and experience life to its fullest may provide us with the opportunity to fix many of our enduring problems and tackle the inequities that have left too many behind in years past, particularly those in rural and underserved communities and markets.
Now is a great time to redefine the economy, our communities and our own small businesses.
The secret is to ride the wave, not fight your way against the tide.
In the Emerald City, peeling stickers off my son’s Rubik’s Cube while he’s at work,