The talking heads can call this whatever they want, politicians can dodge it best they can, the fact of the matter is the economy sucks right now and we are likely in a recession. Background screeners are in a precarious spot because business was great and the last time mass layoffs were on the horizon, during COVID, our businesses did great. That won’t be the case this time. The layoffs have already started, hiring freezes have been announced and there is a ton of uncertainty out there.
I’m no economist, but I think a lot about the economy and how it affects hiring. It doesn’t take a rocket scientist to understand that when people stop hiring, background screeners don’t do as many background checks, this is, and always will be a fact.
Background screeners and the economy are resilient. They will both rebound, it's only a matter of when. What really scares me in this market is access to capital. Usually, interest rates rise and it can put us into a recession but this time I feel like it's a recession causing the interest rates to increase, albeit indirectly from inflation. This theory is of course debatable, but as we quickly head into a recession, interest rates are already high with no sign of them coming down. A recession with high-interest rates hasn’t happened since the late 1970s, so not only are we all making less money, access to cash is now way more expensive. In 1973 interest rates finally declined at the end of the recession and in 1979 rates rose throughout the recession only to fall towards the end. As credit becomes more difficult to obtain and more expensive to maintain, businesses fail and business activity slows down.
What's the underlying theme here? Cash is king. Save your money, find better and more automated ways to operate, grow through net new sales, be opportunistic, make smart acquisitions and take care of your clients!
If you’re looking for a recession strategy, looking to hire talent to make the cash register sing or just want to chat give us a call!
Best,
Jason
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