T
oday the Commerce Department announced that the economy grew at an annual rate of just 1.1% during the fourth quarter of 2005, the lowest rate since the fourth quarter of 2002. And the stock market rose. A fair bit.
The market may have ignored the data, but let's consider some key things. This data point isn't the first hint of a decelerating economy. The yield curve which is still rather flat, inverted briefly with two year rates topping the 30 year rates. While much has been written about that, it is a traditional sign that the economy is headed into recession.
Now we have at least two signs.
I don't want to sound alarmist. To the contrary, I think the economy will do well and will rebound from this short term deceleration.
That said, wouldn't it be wise for middle market executives and entrepreneurs to consider the implications of a slowing economy? May I suggest a simple idea?
Get while the gettin's good! If you've been thinking about raising money or selling your business--pull the trigger. In six months, we may be looking back and wishing we'd only taken better advantage of that great economy while we had it.
If the economy continues at a healthy pace, how sorry would you be that you pulled the trigger early and got a great deal done? If the economy really starts to slow and deals slow down and valuations fall, how sorry will you be if you didn't get your deal done!
Just a thought.
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