Every company should have plans for when business is booming and when business is struggling. However, not many effectively plan for the future. But how can they? No one quite knows what the future holds for their business.
While no one can be 100% sure, we at ITR Economics have a solid track record of helping businesses move forward with a high degree of confidence. When consulting, we help companies plan ahead with our accurate forecasts, expert insights, and exclusive four-phase business cycle. In fact, planning a business cycle ahead is a crucial part of setting your business up for success.
What Is the ITR Economics Business Cycle?
The ITR Economics business cycle divides performance into four distinct phases. It applies to individual businesses, industries, service providers, financial firms, and markets. The four phases are based on our rate-of-change methodology and are defined as Phase A, Recovery; Phase B, Accelerating Growth; Phase C, Slowing Growth; and Phase D, Recession.
Understanding your place in the business cycle and knowing which phase will come next will help you make the right decisions for your company at the right time.
There are many markets, key Leading Indicators, and datasets we leverage in order to reach conclusions. Key components such as US Industrial Production help provide us insight into where the US economy as a whole is headed. From there, it is a matter of determining specifically where your company fits into the overall economy. Each firm has leading and coincident indicators that can provide a realistic view into the future.
Currently, US Industrial Production is in Phase C, Slowing Growth. With industrial growth slowing as we close out the year, many are speculating that the economy is headed toward a recession in 2023.
[ Further Reading: My Company Has Entered a New Business Cycle Phase – Now What? ]
As we look at the business cycle, it would appear that Phase D, Recession, is next. However, the business cycle doesn’t always go from A to B to C to D.
Businesses, industries, and markets can move from Phase C toward a “hard landing” or into a “soft landing.” A hard landing is what you might expect – moving out of Phase C and into the dreaded Phase D. But with a soft landing, the subject series may get close to the zero line in the business cycle, but the rate-of-change ultimately remains positive.
In a soft landing then, the subject series bypasses recession by transitioning from Phase C right back into Phase B, Accelerating Growth.
As we look at ITR Economics’ forecast for US Industrial Production in the chart below, we see that Phase C, Slowing Growth, is happening right now. But as we look ahead into the second half of 2023 and beyond, we see that growth will be accelerating. The next step is to find out how the shift in the rate of growth will impact your company.
ITR Economics US Industrial Production Forecast
Forecast as of September 28, 2022
Our overall industry forecast accuracy since 1985 is 94.7% at one year out. Thanks to our accurate forecasts, we can look ahead years into the future and help businesses plan accordingly.
You can use ITR’s insights for your business’ strategic planning, as we offer actionable Management Objectives™ for each phase of the business cycle. Without planning a business cycle ahead, you could end up incorrectly planning for a recession when you should be planning for how to best capitalize on the growth coming in Phase B.
You might be asking yourself, “How can I get these insights to see into the future for my business?” The best way to start is by signing up for a free trial of our Trends Report™. The business cycle is the basis of the monthly Trends Report, an industry-leading publication that offers 45+ articles that include economic forecasts, insights, and strategies to help give your business the edge over your competitors.
As you can see, it is easy to make detrimental mistakes when your business isn’t properly prepared for what’s to come. With help from ITR Economics, you can effectively plan an entire business cycle ahead to best set your business up for success.