The Real Economy

A monthly publication for middle market business leaders

Is the Economy Headed for Recession?

The Real Economy: Is the Economy Headed for Recession?

The February edition of RSM’s monthly publication, The Real Economy, features outlook from Joe Brusuelas, the firm’s chief economist, regarding the probability of a future recession. We dive deeper into the factors that influence the predictive models and also look into how organizations can prepare for the end of this business cycle.

Our preferred recession probability model, the New York Federal Reserve’s Markov switching model, is currently forecasting a 23.62 percent chance of a recession occurring during the next 12 months. Since 1960, once the Markov model breached 30 percent, a U.S. recession has always followed. There are a number of ways organizations can begin preparing for the end of the business cycle; through balance sheet considerations organized around budgetary, supply chain, banking, talent, productivity, and efficiency needs inside their businesses.

Internal audit can help with these preparations through their work in identifying gaps and inefficiencies within the organization thereby allowing for an organization to make essential changes to increase efficiency before a period of economic uncertainty.

Some focus areas may include supply chains, budgets, workforce, systems, and operations to ensure that these areas are prepared for both opportunities and potential threats to the business. Internal audit should be asking management how its business might be affected by an economic downturn and what management strategies are in place to minimize potential disruptions. Some scenario analysis and planning will be helpful in determining strategies and alternatives in the event of potential economic headwinds.

For a deeper dive into these issues, download February’s issue of The Real Economy.

Download the full issue now.

Principal partner resources are premium content for Audit Executive Center members only. If you are not already signed in, please sign in to access the resources. Not a member? Learn more about the benefits of AEC membership.

About The Real Economy

The U.S. middle market makes up one-third of the country’s economy and employs one-third of its workforce, yet this economic growth engine is often overlooked. As the leading provider of assurance, tax and consulting services to middle market businesses, RSM wants to change the conversation.

The Real Economy is a monthly publication to help the middle market anticipate and address the unique issues and challenges facing their businesses and the industries in which they operate. Written by our chief economist, Joe Brusuelas, and including the insights of professionals throughout the firm, The Real Economy is RSM's answer to making sure the unique needs and opportunities of this important segment of our economy are given the attention they deserve.​​​​​​​