Easy answer – who knows? Not so easy answer – who knows? The election (mercifully almost over) will set a course depending on which party wins. The pandemic will set the other course. Regarding the election maybe the biggest immediate unknown is whether there will be any kind of immediate stimulus package that could include some type of immediate cash payment like the last package and/or renewed unemployment assistance. The economy grew at a record pace in the third quarter but is already losing steam. A renewed stimulus package would help mitigate the effects of the new Covid restrictions now being put into place in some parts of the country. But there is a lot of time between election results and inauguration day. This “Who knows?” – what could happen between election and inauguration, would get the all-caps treatment.

As for the pandemic course, the situation for the economy is trending less optimistic even as third quarter GDP took a dramatic 7.4% jump. But on the other side of that picture layoffs in some industries are beginning to increase. Several states are already beginning to re-impose restrictions, and if infections and hospitalizations keep spreading (in thirteen Midwestern states average daily cases has jumped 45% over the last two weeks) more restrictions might be put into place. How much effect could that have on Christmas shopping? The most likely effect is that online shopping could increase even more. That could then mean less people going to stores forcing layoffs again in the retail sector.

For a small business owner, if consumers begin to hold back spending at all because the virus is taking a larger toll or more shutdowns are put in place, you need to be even more careful about your cash. Until workers and consumers feel safe and healthy, spending is probably going to continue to be restrained. Do you have costs that can be cut? Are there potential new sources of revenue? Could you cut back on the variety of items you sell? Will you have enough cash to make it to spring when there will start to be more daylight and hopefully a vaccine beginning to be administered in large numbers? If real improvements do begin to take hold in the spring, one scenario that I could see (with my tongue firmly planted in my cheek) is that consumers will be desperate get out to spend all that money they have been saving and will come pouring out of their houses waving their credit cards and throwing cash into the air to celebrate as they race to the stores. Make sure that you’re still there to open the doors and get out of the way. Cash is king.

Source by Doug Carleton