Opinion | Patrick Brower: Why local fears of recession are actually good news | SkyHiNews.com

Opinion | Patrick Brower: Why local fears of recession are actually good news

Patrick Brower
Grand Enterprise Initiative

I meet with many up-and-coming entrepreneurs in Grand County every month. And one concern, lately, is being consistently voiced by these people: recession.

These are people who are looking open new businesses or who are considering major expansions of their existing businesses. I’ve been surprised but gratified to hear them voice concerns about a recession.

What is a recession? Technically, it’s two quarters of a drop in a country’s gross domestic product, which is the value of all goods and services a country produces. Basically, a recession is a drop in a country’s economic activity.

And yet, this talk of recession and even a recession itself is almost good news for Grand County. Here’s why.

Fear of a recession in and of itself results in prudent and astute business management. When a manager or owner foresees a drop in sales and production coming up, they usually make adjustments in expenses, borrowing and general overhead to prepare for this expected drop. Such planning is good, no matter what happens.

Having said that, I just don’t think a recession, if one happens, would be bad for Grand County business. In fact, it might be good.

From what I see, many of our existing businesses are operating in a high demand environment where they have been having a hard time keeping up. This is mainly due to employee and hiring shortfalls related in big part to the housing crisis.

So, in my view, even if overall demand for our services and products were to ebb a little due to a recession, it just might give our local enterprises time to catch a breath and catch up. That’s how busy and overheated much of our economy has been lately. Really.

But the truth is that I just don’t see a national-level recession having a big impact here in Grand County. That’s because local tourism, local construction and other local services and products (cattle, hay and water) may be immune to big hits.

Think about it. Many of the contractors and builders in Grand County are two and three years out in being able to build new homes or product. This suggests strongly that those owners of these homes or commercial structures have already acquired financing that’s already on the books and not likely to be hurt by upcoming credit issues due to a recession.

And, in many cases, these products don’t depend on borrowed money as many of these new owners and builders are being paid in cash or from already guaranteed insurance settlements. That’s money that was guaranteed or acquired in the past, not in the next year. That is, not during any near-term recession.

Tourism? In the past big economic downturns nationally have impacted local tourism levels in a negative way. But that was 20 years ago. In our current economic situation, I just don’t see that tourism to our area, for both winter and summer, will be greatly impacted in a negative way.

First, local tourism-related bookings for the summer already look very good. Secondly, if COVID taught us anything about our tourism-based economy it is that downturns in the rest of the country only boosted our tourism activity. Yes, we were hurt for three months at the start of COVID, but the economy’s COVID woes did not last in a way that hurt tourism. In fact, tourism-related business is up — way up — in Grand County. Some say that’s because of COVID.

If you don’t believe me, just look at the jumps of 10 percent to 20 percent in sales tax revenues to our towns and the county in the last three years.

I think there probably will be some sort of a mild recession nationally this year. A simple Google search reveals that the opinions from experts put the predictions of a recession this year ranging from a 99 percent chance of recession to a low 51 percent chance of recession. Many are suggesting there will be a mild, short-lived recession in the next few months.

Which makes me think that we might have a recession just because so many people keep worrying about a recession, prompting others to think a recession is coming, prompting them to cut back save for the coming recession, which in itself causes a minor recession. Talk about a self-fulfilling prophecy . . .

So I don’t think that there will be a recession that local businesses need to worry about. And if we do have one, recession fear-mongering just might be partly to blame.

Patrick Brower is the Enterprise Facilitator for the Grand Enterprise Initiative. He offers free and confidential business management coaching to anyone who wants to start or expand a business in Grand County. He is also the author of “KILLDOZER: The True Story of the Colorado Bulldozer Rampage.” He can be reached by calling 970-531-0632 or at patrickbrower@kapoks.org.

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