The Market: Interest rates, inflation, political conflicts – what is going to happen?

Our Primetrics team attended the 2022 AICPA Engage conference this month. While there, we received an update from J.P. Morgan. JPM believes the Federal Benchmark Interest Rate will hit 3.26% by late 2023, up from 1.75% set on June 15th, then predicts it will fall slightly by mid-2024. This increase is substantial, so it is essential to understand its impact on any debt you have that moves with the federal rate.

As we speak, inflation is affecting housing, energy resources, and wages dramatically. Wages are a particularly hard issue to try to navigate for small businesses. You don’t want to increase your wage costs in the short term, but you do need to adjust wages so you’re not materially outside the market and risk losing key employees. This is a difficult balance. Market wage surveys and job postings can help you hold the line on costs and give you confidence in your salary ranges and annual increases. Modeling the impacts of inflation and interest rates on your business is a critically important process to ensure your business model is still sound and you are not surprised down the road. We provided some links below, but are also open to discussing this with clients.

The team at J.P. Morgan does not believe the US will go into a full recession in 2023-2024. They believe things will slow down. For Europe however, there is a chance they will due to material increases in energy prices and COVID spreading again. In addition, there were concerns about countries aligning with Russia on energy like India. They believe foreign investment could significantly pull back if those countries continue these practices.

If you have questions about the macroeconomic picture, we are happy to go into more detail in our monthly CFO calls.

Want to know more? Click one of the links below:

HR Resources from SHRM (Human Resource Association)

https://www.shrm.org/resourcesandtools/tools-and-samples/hr-qa/pages/howcanilocatesourcesforsalarysurveydataforallindustriesandoccupations.aspx

RHI Salary Survey

https://www.roberthalf.com/salary-guide

Pay Rate Tool by position

https://www.payscale.com/