Economy in Yo Yo mode for next year opined by a TEC Advisory Group

TEC advisory group for CEOs meeting a day ago has the opinion that the economy in general that we are still in for more of the ups and downs of the stock market and economy in general.  This advisory group includes professional service providers from mergers and acquisitions specialists, human resource consultants, group insurance providers, merchant banker, investment wealth advisor, business advisory coaches, CFO advisor, to CEO mentors.

The majority of the advisors in the room have over 20 years business experience and have gone through some of the downturns and definitely say that the major difference today in coming out of this last recession is that no one seems to believe that we’re on our way to a major recovery, that the recovery will have hiccups and the economy will go up and come down, maybe averaging zero percent growth for the next couple of years, but potentially income taxes might need to rise in order to continue to pay for continued government economic stimulus.

For a lot of business owners they have experienced a time period where there hasn’t been either constant of great growth and their sales teams haven’t had to work really hard and make several pitches to a prospect before they become a customer.  For some regions of Canada, sales teams are being slowed down to several months before a prospect gives the okay to a purchase.  For some inexperienced sales reps this is new territory and the adage of its cheaper to get a current customer to buy than to bring in a new customer is much more relevant in today’s world.

Statistics from various agencies have shown that the economies of the world have been propped up 100% entirely from the world’s governments economic stimulus plans.  We question when the stimulus plans are done, whether or not consumer confidence will have increased to the point of taking over or whether more economic stimulus dollars will be needed.

The end result of stimulus plans will always be higher taxes, and this time around I am thinking that it will be individuals’ income taxes which will increase by a few percentage points rather than business.  We need business in order for their to be employees to pay their taxes is always the rationale behind increasing taxes for individuals.

We can hope that consumer confidence will grow in the near future so government stimulus won’t be necessary.

Written by Richard Wong, CMA     email: rwong@firstchoicecapital.ca