I also had some time to look at economic data – fourth quarter GDP grew at a 2.9% annualized pace in the final months of 2022, even better than analysts anticipated. That said, when you dig into it, the Federal Reserve’s efforts to slow growth to keep inflation under control seem to be working. Demand growth slowed in the fourth quarter, and Business investment had been resilient, but that changed last quarter: It grew at a 0.7% annual pace, off sharply from 6.2% in the prior quarter.
Personal consumption, representing about 70% of all US output, came in below forecasts, signaling Americans aren’t reaching for their wallets as they had earlier in the pandemic. Growth in business inventories also suggests a more cautious consumer.
Other data of note: According to the Economic Innovation Group, there were 1.7 million applications for new businesses that were likely to hire employees in 2022. This bipartisan organization analyzed data from the U.S. Census.
That’s down slightly from 2021’s record of 1.8 million but still well above pre-pandemic norms. Last year’s applications are up nearly 28% from before the pandemic.
Creating all those new businesses should be perfect for small business-focused IT services companies. Fingers crossed that the Fed is landing the plane in that area of “soft landing” they have talked about, but regardless, nearly 3 million new businesses were created in the last two years.
And as long-time listeners know, these companies come with none of the legacy baggage of their competitors in technology. They’ll be looking to be cloud-first and agile, so serve them on their terms.