Recession may already be here. Where will you be on the other side?

Written by Technically Media CEO Chris Wink, Technical.ly’s Culture Builder newsletter features tips on growing powerful teams and dynamic workplaces. Below is the latest edition we published. Sign up to get the next one.

You’re on a plane going through especially bad turbulence. The passenger to your right says, “We’re going to crash.” The passenger on your left says, “We’re going to be fine.”

Neither can be sure. We haven’t finished going through the clouds.

The Federal Reserve, the world’s most influential central bank, is intentionally slowing down the American economy by making money more expensive by raising interest rates to combat surging inflation. Monetary policy sends ripple effects across the economy. Tighter monetary policy cools asset prices, which we first saw in public markets. Lower big company market capitalizations translate to trimmer private market valuations. An investment analyst told me valuation multiples shrunk “literally overnight.”

Businesses and households pull back spending. Optimists hope the white-hot hiring market can cool without unemployment rising too much. Layoffs are hitting highly valued tech firms, and experts are staring at a steady stream of economic data — as partisans spin whatever news they can to reflect their view of the world.

We may already be in a recession. Wharton School’s Jeremy Siegel says it’s a mild one. A nice rule of thumb is that a recession is two consecutive quarters of gross domestic product, but in reality it’s more art than science. A committee of economists officially gets to name a period a recession based on the interplay of the depth, dispersion and duration of an economic downturn. Remember, the pandemic-powered 2020 lockdown was our country’s shortest-lived recession.

Recessions have always been part of capitalist systems. They’re the routine end of economic cycles of growth. It’s just that this has been an especially compressed cycle — pandemic collapse, cheap money high and the inevitable retreat.

Business leaders are all asking the same question now: Just how brutal will this downturn be? Some are expecting the worst. My early bet was that we’re going to be fine. That’s still possible.

“The news is precarious but maybe that is what we need to see if we’re going to have a soft landing, not a horrific crash landing,” as one TV finance personality said this week. “If all the data were strong we’d be set up for a series of aggressive rate hikes that would wreck the economy. If all the data were weak, then it’s already too late.”

People are losing jobs. That’s always scarring. It’s possible many more will, too. Most operators I’ve spoken to all have said the pandemic was a learning experience for them. If they survived, the pain made their businesses stronger; if they didn’t, they were forced to regroup and find a better place to be. No one wants to confront that trauma again so soon but, if we avoid the worst kind of crash, a crisis is an opportunity. Entrepreneurship is up; underperforming companies wither; teams are forced to focus on the biggest challenges.

Where do you want to be on the other side? Once more unto the breach, dear friends, once more.