We recently completed our 2023 Economic Outlook, with an eye to Black firms.
Overall, we are optimistic. Our baseline forecast shows the US avoiding recession over the next year. Globally, foreign economies are at the midpoint of efforts to raise interest rates. This means the odds of recession are higher outside of the US than they are domestically.
We continue to believe that now is the time for Black firms to obtain capital. Historically, there has never been a better time for Black firms to do so. A number of new capital sources offer funding for Black firms specifically. These include JP Morgan, MBDA, several new Black-focused venture capital firms. We suggest Black firms focus on banks and corporations making Black Lives Matter (BLM) Pledges. (For a list, see Chapter 9: Corporate Pledges to Black Lives Matter: A Source of Capital? in Thriving As a Minority-Owned Business in Corporate America: Building a Pathway to Success for Minority Entrepreneurs. https://link.springer.com/book/10.1007/978-1-4842-7240-4)
Several funds, grants and other financing efforts targeting Black women in particular have started in the past three years. For more, see our free class, How to Finance a Black Women-owned Business in 2022. https://www.udemy.com/course/blackwomenbusinessfinancing/
Given an increasing focus on social impact and the desire of Gen Z employees to work on more meaningful ventures, Black firms that are focused on serving the community may have a better chance of gaining and retaining employees than white firms without a social mission or focus.
Finally, for Black firms, Africa remains an area of opportunity.
Some key insights:
- The Fed has done a masterful job lowering inflation. Based on the improvements we started tracking in the Second Quarter of 2022, https://www.impactinvesting.online/2022/07/the-us-economy-improved-in-second.html we think the Fed may get its “soft landing” after all.
- The only risk to the forecast is the GOP. Uncertainty surrounding policy initiatives adds to the risk of the party engineering an economic slowdown via ideologically based policies that damage economic prospects. These include:
- Tax cuts skewed to the wealthy – which would add to the deficit and make inflation worse.
- Raising prescription drug costs, lowering disposable income for millions of seniors.
- Failing to responsibly manage fiscal policy by refusing to raise the debt limit and by risking a government shutdown.
- Increasing or not lowering student loan payments.
- Policy discussions about cutting Social Security or Medicare will add to economic uncertainty for millions of Americans and may drive the economy into a recession.
At this point, Republicans are the only risk to a positive economic outlook.
This editorial originally appeared in the Creative Investment Research newsletter.