Following yesterday’s inflation report, many businesses are looking for ways to help their company survive the economic downturn.
Key Details
- Inflation may take longer than many had hoped to return to the Federal Reserve’s target inflation rate of 2%. To prepare for the long haul of high inflation, businesses need to follow proven paths to success.
- Management consulting term McKinsey & Company has some pieces of advice for businesses hoping to navigate the tempestuous economy. . .
- Continue focus on growth projects, turning market disruptions into opportunities. Be prepared when the tide rises.
- People are your most valuable asset. Cultivate employee talent, focusing on relational aspects of the employee management.
- Carry on with sustainability projects that reduce costs and build value. This is only going to get more important.
- Confirm the strength of business supply chains and assess for any vulnerabilities.
Why it’s news
Economists had predicted that the Consumer Price Index (CPI) would fall from July’s 8.5% to 8.1% in August. However yesterday’s numbers revealed that the CPI had only slipped to 8.3%, causing the stock market to take a 4% hit.
As investors sold off stock, the market fell to some of the lowest numbers since June 2020.
The disappointing numbers could also indicate the Federal Reserve is taking a harsher approach to inflation, meaning interest rates could rise again.
Notable quote
“A very simple way to think about it is that we’ve seen a shift from tangible to intangible value in terms of corporate valuation. It used to be … corporate value came from plants, buildings, machinery, cash assets. Now it comes from branding, network effects, stakeholder trust, R&D, IP. And so all of this basically means that stakeholder perceptions, public perceptions, employee perceptions are a far greater proportion of corporate value than they used to be. And that largely accounts for the investor interest,” said NYU’s Alison Taylor in an address to Fortune Impact Initiative.