I’m Mary Walden with economist MW welcoming you to the economic perspective. Today’s program looks at business worries. Mike, there are many concerns about the ability of the economy to continue expanding. Obviously, people worry about their jobs and incomes. But what do businesses worry about, and how could those worries affect the direction of the economy?
- Two factors impact a business’s profits, revenues and costs
- Recently revenues have been good as consumers have continued to spend
- But two concerns about costs – higher input prices due to tariffs, and higher labor costs as jobless rate has dropped
- Also, with so much competition, hard for businesses to pass on some of those higher costs to consumers
- So can get a shrinkage of “margins” – i.e., profits
- If business is less profitable, will cut back- can adversely impact jobs and incomes of workers
- If these cutbacks result in less consumer spending, businesses will slow down – a vicious cycle
- So business worries can become our worries
- I’m MW
And I’m Mary Walden for the Economic Perspective, an NC State Extension program from the Department of Agricultural and Resource Economics.