The Insightful Leader
Sent to subscribers on January 17, 2024
For much of 2023, the word on (nearly) every U.S. economist’s lips was “recession.” But here we are in 2024, and the widely prognosticated downturn has yet to materialize. What happened? Are we really in the clear?
This week, we’ll hear from Kellogg’s Janice Eberly on the recession that wasn’t and the general state of the economy. We’ll also share some advice on managing the succession challenge in family businesses.
What’s going on with the U.S. economy?
Cast your mind back to late 2022 and early 2023: supply chains were still a mess from the pandemic. Immigration and labor-force participation were down, sending wages skyrocketing. Inflation was sitting at an eye-popping 6.5 percent.
No wonder economists were worried.
But, as Eberly told The Wall Street Journal, “the U.S. economy was in a very different place than it is now.” Those struggles—with supply chains, hiring, and inflation—all lessened over the course of 2023.
The Journal was covering the American Economic Association’s annual meeting in San Antonio, TX. Among the experts there, the consensus was now that the U.S. is headed for a “soft landing”—that is, decreased inflation without a recession.
But while a temporary sigh of relief may be warranted, there’s reason for concern about longer-term economic prospects. In a presentation at the conference, Eberly argued that just getting back to business-as-usual won’t be enough to jolt the U.S. economy out of the sluggish growth trajectory it had been on pre-pandemic. The U.S.’s aging population, as well as global conflicts and changes to trade patterns, pose serious challenges to productivity that must be overcome to boost long-term growth. Top candidates for increasing productivity in the long term include AI, increased levels of immigration, and hybrid or remote work arrangements that keep people in the workforce.
You can read the whole article in The Wall Street Journal.
Family matters
By some estimates, 90 percent of businesses are family-owned. And while few are as consistently Shakespearean as the fictional Roy family of HBO’s Succession, many have to navigate complex family dynamics in the immediate term to set themselves up for success in the distant future.
“Family businesses need to focus on long-term resilience, which means preparing the next generation,” says Matt Allen, a clinical professor at Kellogg and executive director of the John L. Ward Center for Family Enterprises. “That’s a different time horizon than quarterly earnings.”
In a recent Kellogg Insight article, Allen offered some tips on how family enterprises can build and preserve multigenerational resilience.
For example: don’t delay planning for a leadership transition.
If everyone knows a decade in advance who will take the helm, the entire organization can prepare accordingly. “What works terribly is saying, ‘We’ve got three kids and we’re not quite sure who will be taking over,’” Allen says.
In addition to transparency and a measure of continuity, the value of choosing early is that the new leader will have time to build their own relationship with employees and customers, Allen notes: “When you have a date already set and a ten-year window to work with, that makes everyone comfortable.”
You can read the rest of his advice in Kellogg Insight.
“We’re finally at the point where the regulator is willing to give us clear guidance in terms of what’s legal and what’s not.”
— Clinical professor of strategy Sarit Markovich, on NPR, on the Security and Exchange Commission’s approval of exchange-traded funds that will track bitcoin prices.