Business is better

Over the past several months, there’s been a bit of a buzz about the direction of the global economy. In conversation, many business leaders will express deep concerns about inflation and the onset of recession. Yet, when asked about their financial performance, most all of them say, “Business is going great!”

Within these conversations lies an obvious disconnect between economic expectations and individual business results. Why is it that we think things are getting worse when they’re actually getting better? Perhaps it’s the long-overheated stock market, coupled with an instinctual bit of defensive self-preservation.

Much of what one reads about the economy or corporate earnings is grounded in comparisons with year-over-year results. However, in my experience, last year’s numbers say equally as much about last year as they do about this one. What kind of year was last year? Was it great? Or, at best, was it just a rebuilding year from an underperforming baseline of pandemic conditions?

For the most part, reports of price gouging and runaway corporate profits are overstated. To be certain, inflationary pressures are leading to higher prices, but simply comparing this year’s prices with the previous year’s vastly oversimplifies the conversation.

Bottom-line improvements are a combination of both price and volume variances. After coming through two-and-a-half years of a pandemic-induced recession with severe supply chain disruptions, most businesses are just getting back to normal or what’s often called “the new normal” of sales volume. It’s been a while since supply and demand were actually anywhere near equilibrium.

At the same time, most companies are continuing to benefit from pandemic-induced cost-reduction measures. It’s no wonder that inflationary price increases are falling quickly to the bottom line. Simply put, business is better.

A couple of quarters of economic contraction with no true recession, followed by a better quarter. A couple of months of rising prices, followed by slower increases. Near full employment, resulting in difficulty in recruiting and hiring. All the while, profits for many companies are higher. Compared with the outlook a couple years ago, we should definitely be grateful for the current economic conditions.

Meanwhile, along with the new normal is what one might call the “new networking.” Almost three years of Zooming has left many of us Zoomed out. Fortunately, in-person business events are starting to make a comeback — it’s just a bit different now. After a long hiatus from in-person networking, the biggest difference is that there are a lot of new faces in the crowd. Many of the people that used to attend nearly every business event seem to have retired, changed jobs or otherwise moved on during the pandemic.

New faces are a good thing. As we reset and restart in 2023, there’s a whole new generation coming up through the workforce. Think about the theory of “weak networking” — essentially this means the more people you meet who are less tightly connected to those you already know, the more likely they are to lead you to an entirely new set of business prospects. With that in mind, you can expand your network and prospects with our 100 People to Meet in 2023 feature, which contains some new and interesting people you should get to know better.

We’re also proud this month to feature Jim McGlothlin as our 2022 Virginia Business Person of the Year. (Read December 2022 cover story.) McGlothlin’s business acumen, accomplishments and philanthropy are legendary. They are the stuff that great stories are made of, making him exactly the kind of person you’d like to meet.

As 2022 draws to a close, I’d be remiss if I didn’t take a moment to thank all our readers and advertisers for the outsized role each of you plays in the economic success of the commonwealth. Because of you, business is better for all of us!