How Do Businesses Survive the Next Great Depression?

Economists are predicting a Second Great Depression. What should your business be doing to prepare?

Due to its unpredictability, the current economic climate has been very difficult for many businesses to navigate; however, some sources have proven to be very reliable in their forecasting. In October of 2022, The Strategy Forums hosted their 8th annual Economic Forum, which featured award-winning economist Dr. Alan Beaulieu from ITR Economics. ITR Economics is well respected as a reliable, apolitical economic research and consulting firm with a forecast accuracy rating of 94.7%, according to their website.

The Second Great Depression

The Blackink IT team regularly attends the Economic Forum, and this year was no exception. Each year, Dr. Beaulieu’s speech brings new insights, analyses, and predictions, but year after year, one talking point remains the same: that ITR Economics is confidently forecasting a Second Great Depression in the 2030s.

ITR Economics predicts that the “Next Great Depression” will begin in the early 2030s, and last approximately 6 years. ITR also notes that this depression will not be unique to the United States; it will be a global depression. The depression may even reach other countries before impacting the US.

 

Causes of the 2030’s Great Depression

What will cause the 2030s Great Depression? Dr. Beaulieu lists these 5 key drivers:

Demographics
  • The world population is aging, and by 2030, the younger (working) population will be significantly smaller than in the past. This smaller working population won’t be contributing enough in taxes to support the larger older generation. Additionally, this smaller working population will likely contribute to labor shortages.
Health Care Costs
  • The aging population will also contribute to increasing health care costs; by 2030, there will be 80 million Medicare recipients in the US. This, alongside inflation, will continue to cause health care costs to rise, and the government will be forced to increase taxes and borrowing as they look to support those on Medicare.
Entitlements
  • It is well documented that entitlement programs, particularly Social Security, are not adequately funded to survive much longer without significant changes in policy. ITR Economics predicts that no new solutions to support Social Security will be implemented, and that those who rely on this program are likely to see significant cuts, causing further strain on the economy.
Inflation
  • Federal deficit spending will be commonplace throughout the rest of the 2020s, and the US dollar will continue to weaken because of this. As the dollar weakens, inflation will continue to rise.
US National Debt
  • The United States debt currently sits at over $30 trillion, and ITR Economics predicts that there will be no steps taken to significantly decrease the national debt. Many nations across the globe, including the United States, will be hurt by the amount of debt that they carry during the Second Great Depression.

Surviving the Next Great Depression: Is Technology the Answer?

Although there is much discussion about the 2030s Great Depression, the Economic Forum is not a “doom and gloom” event by any measure. Dr Beaulieu presents data-driven forecasts alongside recommendations so that individuals and businesses can be proactive in taking action. These recommendations give assurance and direction to those who may not know how to begin preparing for something as daunting as a Great Depression.

One of his most pressing recommendations for businesses is to invest heavily in automation and efficiency technology. During his talk, Beaulieu said that “IT is a phenomenal place to be spending your cash right now, because doing so will prepare you tremendously for when the economy turns.” By investing in automation technology now, businesses will be creating efficiencies to save them staggering amounts of money.

Speaking specifically to the current labor shortage that will persist into the Next Great Depression, Dr. Beaulieu states that “we have no solution to filling 10 million jobs tomorrow, so wages will continue to increase... that’s why you must automate, automate, automate, [and look for] efficiency gain, efficiency gain, efficiency gain.” Finding talent is going to continue to be difficult for businesses, and the talent that can be found will become increasingly expensive. Utilizing technology to increase efficiencies will be key in keeping labor costs down.

Increasing Efficiency Through Technology

Dr. Alan Beaulieu is confident that businesses must utilize technology in order to survive the Second Great Depression: “If you don’t invest in [automation and efficiency technology], I don’t believe you’ll survive the decade. You have to do it, in my opinion.” Investing in technology that creates efficiency is not only a way for organizations to save money, but will also prove to be a key factor in surviving the economic environment ahead. Interested in learning how your organization can increase efficiency through technology? Contact the experts at Blackink IT – we're excited to help you prepare for the future!