“The consequences of our actions are so complicated, so diverse, that predicting the future is a very difficult business indeed.” —J.K. Rowling, Harry Potter and the Prisoner of Azkaban

“If all the economists were laid end to end, they’d never reach a conclusion.” —George Bernard Shaw

The next recession lurks around the corner. Which corner and how far away it is remains a matter of great disagreement among folks that predict such things. Similarly, even reading the same tea leaves, their predictions on the severity and length of the recession vary dramatically.

Regardless of when and how severe the next recession, don’t get caught without a plan. Being prepared for the next economic hiccup will greatly increase your chances of business survival. You may even be in a position to benefit from it, green industry economist Dr. Charlie Hall shared in a recent webinar. (More on Hall’s views later.)

For those of you with a short memory, the so-called Great Recession (2007-2009) destroyed thousands of small businesses. Casualties included many green industry companies, including regional powers. As severe as it was, there have been six other recessions this past half century alone. That’s one every seven years.

You guessed it: Today’s economic recovery is in its seventh year.

Dramatically different predictions

Hall, professor and Ellison chair in International Floriculture at Texas A&M University, and James Dale Davidson, private investor and author of Strategic Investment, an investment newsletter, recently offered starkly different views on the timing and severity of the next recession.

Let’s start with Hall’s outlook of the economy, which he shared in his recent Mid-Year Economic Outlook webinar, sponsored by the Texas Nursery & Landscape Association and the Southern Risk Management Education Center.

Hall, who holds a doctorate degree in agricultural economics from Mississippi State University, doesn’t see anything suggesting to him that a recession will arrive sooner than 2019 — barring some unforeseen event, that is. And when it does arrive, he predicted it will be mild, certainly much milder than the Great Recession.

Hall (sometimes referred to as “Dr. Silver Lining” within the green industry) said although the economy is trudging along at a “plow-horse rate,” he said it is producing more goods and services than it did prior to the last recession. Also, he noted that each and every month during the post-recession recovery has shown positive job creation. Housing starts? They’ve increased every year since 2010, he said adding the caveat that much of that activity is being driven by large institutional investors who seized the opportunity to snatch up distressed properties and turn them into rentals.

Uncertain economic times

Hall believes many business owners remain hesitant to make significant investments because of uncertainty. Among other factors, he cited the approaching election, the lack of immigration reform, the student debt crisis and the ultimate fallout from Brexit.

Hall did not wade into the Trump versus Clinton presidential race. Nor did he opine on the impact either candidate would have on the economy or the green industry as our next president.

“A president, in and of himself or herself, has limited power,” said Hall. “Congress, that is the other major cog in the machine. Our forefathers built this system for a purpose, for a nation of laws. For a bill to become enacted it has to have a lot of support on both sides of the aisle.”

In spite of the uncertainty many business owners feel, all of the economic indicators he regularly follows suggest there is still time (two years? three years?) for business owners to make strategic investments and reap an acceptable return on invested capital before the next recession arrives.

A much scarier prediction

Investment guru Davidson, by contrast, falls in the camp of the gloom-and-doom economists. He predicts the next recession is imminent and it will be severe. He cites five giant cracks in the U.S. economy: 1. stock market wipeout, 2. looming real estate slaughter, 3. $46 trillion wealth transfer caused by the aging of the Baby Boom generation, 4. dwindling velocity of money, and 5. silent wealth confiscation based on and caused by our nation’s unprecedented level of national debt rising by $1 trillion annually.

Without going into the specifics of Davidson’s arguments (easily found with a web search), one of his economic “cracks” — the economic consequences of the aging of the Baby Boomers — seems to find, at least, some common ground with Dr. Hall’s viewpoints.

Davidson says that Baby Boomers (“the most powerful demographic force in history”) comprise 32 percent of the U.S. population and control 77 percent of our country’s total net worth. He said up to 50 million Baby Boomers will leave the workforce over the next 14 years. They will no longer be working and paying taxes to the government. Instead, because of programs such as Medicare and Social Security, they will be taking money from the government.

Hall also acknowledged the effect of the aging of the U.S. on its economy, but from a different perspective.

Desperately in need of immigration reform

“A lot of our population growth over the next 20 years will be related to our immigration policy, and we need that population growth,” said Hall. He pointed to the drag that a dwindling birth rate is having on the Russian economy. “They ran out of young people for their infrastructure.”

Hall said the Congressional Budget Office has modeled three different scenarios in regards to U.S. immigration and each of their effects on the economy. They include: 1. Sending back all “illegals” and building a wall to keep new ones out, 2. Continuing with guest worker programs, similar to those now in place, and 3. Comprehensive immigration reform. The last option will be the most beneficial for the economy, claimed Hall. And our politicians must take action.

“We’ve been a decade now debating immigration reform, and we haven’t had immigration reform yet,” said Hall. “We need consensus on immigration reform.”

Given the widely divergent views on the timing and severity of the next recession by experts looking at essentially the same data, what’s a green industry business owner to do now?

Hall said there remains significant opportunity to grow and build profits in the economic conditions forecast for the next several years. But, he also advised prudence by business owners.

“What sort of predetermined play should I have in my playbook to compete effectively in the heat of battle? What are you going to do if a recession does occur?” asked Hall.

“Maintaining adequate working capital” will be crucial to business survival and growth, should a recession arrive. Becoming “over-leveraged” is not a good idea given the uncertainties in the markets. He pointed to the carnage within the industry caused by the last recession’s credit crisis.

“Any kind of economic disturbance will cause a shakeout,” he cautioned.

When asked by a webinar attender about whether it is wiser to seek business expansion or improve efficiencies, Hall opted for the later strategy — at least initially.

“We’ve seen too many businesses grow in a non-strategic fashion,” said Hall. “Why would I increase the size of my business and still make the same profit margin?” he asked rhetorically.

“To me, it makes more sense to increase my profit margin and then replicate that,” he continued. “I should make my business more efficient; I should reduce my costs; I should automate; mechanize; use my labor more efficiently; do a lean flow analysis. You do that first, then you think about expansion and replication.”