Use the Business Cycle in Your Budget Planning for 2024

With companies now in the middle of the busy budget season, business leaders are hard at work putting together financial plans for the coming year. While many executives are factoring our recession forecast into their budgets, proper use of the business cycle in your budget planning will help you lead your team on the path to success.

With our accurate and data-driven forecasts, ITR Economics helps businesses understand both the current state of the economy and where it is headed. Knowing that we are forecasting a mild recession to begin at the end of 2023 and last through 2024 is important for your budget planning. However, in order to build a sound strategy, business leaders also need to know exactly how and when the recession will impact their industry and specific markets.

Understanding the Business Cycle

The major segments of the economy move through the phases of the business cycle like railcars on a train. If the lead car is beginning to make a right turn along the track, it will be a while still until the last car is upon that same turn. This analogy applies directly to economics: the various industries move through the business cycle, or go through these turns, at different times.

While the overall US economy is currently in Phase C, Slowing Growth, with Phase D, Recession, coming at the end of the year, our Trends 10 insights – a popular feature in our Trends Report™ subscription – detail where in the business cycle the major industries that comprise the economy are now.

ITR Trends 10

Published September 8, 2023

As you can see, the Trends 10 summary identifies the business cycle phase that each of the various industries is currently in. While the general economy is on the back side of the business cycle, the housing market has already navigated through Phase D, Recession, and is now in nascent Phase A, Recovery.

So, while it is indeed important to understand what the US economy as a whole will be doing, you will also need to know where your industry and key markets reside in order to craft your budget most effectively.

ITR Economics can help you identify the current phase of the business cycle for your company, industry, and markets as well as determine where they will be in 2024. Then, you can craft the best budget plan for your business.

[ Use This Helpful Guide for Each of the Four Business Cycle Phases When Building Your Budget! ]

Finding the Best Leading Indicators for Your Business

Once you know how to build your budget based on your current business cycle phase, you can now find the best leading indicators for your company that will give you the best insight into where your business is headed.

We have more than 15,000 indicators in our database, and you can access them with our DataCast Pro™ program. With this service, an ITR economist works closely with your team to pick out some of the best leading indicators for your data.

Once we discover which leading indicators correlate best to your business, we can closely observe which direction these indicators are moving. The lead times of these indicators will be crucial, as they will help us determine where your business, industry, and markets will be heading in the future.

With the US economy set to enter a recession at the end of the year, it is imperative to know where your business stands and how your company will be affected. With our unbiased and data-driven approach, our accurate insights will help give your team the confidence to build a strong budget plan for 2024. Contact us to see how ITR Economics can help you build your budget.