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A Prediction for 2013-2014 (94.7% Accurate)

Back in November, when everyone was so concerned about the fiscal cliff and what Congress would do I had predicted that there were two things you could count on − taxes going higher and the Payroll Holiday tax disappearing. And yes, both happened.

I based these predictions on one of my favorite economists, Alan Beaulieu, President of ITR Economics, because his accuracy in forecasting future economic changes for business is 94.7%. I don’t know any other economist that has a better accuracy rate.

Here are his predictions for the next five years…

  1. The economy will slowly continue to get better in 2013 as it did last year. Then there will be a mild downturn in 2014. But the key word here is “mild.” This one will not be anything like the 2008 recession.
  2. Dr. Bernanke’s policy got people spending again but eventually it will lead to inflation. It has also created an asset price bubble in the bond market.
  3. Unemployment will remain high for the foreseeable future but you will not see any more mass layoffs as companies are finally right-sizing.
  4. Interest rates will start going up in 2014 so now is a good time to borrow especially with banks lending more.
  5. Retail sales are rising as consumers are becoming more confident in their spending.
  6. Construction is improving with higher numbers showing confidence has been restored in both investors and individuals.
  7. Deficit spending will continue. Taxes will increase slowly over time but Congress will find a compromise so that no one group is burdened with paying off trillions of dollars in national debt.

Yes, inflation will reduce purchasing power and increased taxes will reduce cash for businesses but if you plan now knowing where we are and what is coming, you can figure out ways to grow your business.

Cash will remain “king” so reduce your costs by driving better operational efficiencies, restructuring your workforce and compensation plans and negotiating better deals with your vendors. However, at the same time, look for ways to stay ahead of your competitors and grow. With money being cheaper and easier to borrow, look for areas in your company where you will get the best return on your investment and invest in your future. Pursue those opportunities that will set you apart from your competitors.

And with that slight downturn coming in 2014, you need to act now. So what are you STILL waiting for?

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