How Global Unrest and War Affects the US Economy and What That Means For Local Businesses

The last few years have done a lot to show that global situations can have significant impacts here in the US, not just in our day-to-day lives, but also in the economic function of the country and even the normal operations of local businesses.

When it comes to political issues, global unrest, and war can both have significant impacts on small businesses, whether they are directly connected or not.

Modern Unrest And War – A Recipe For An Unstable Future

If the COVID-19 pandemic was not enough proof that the world is headed for an unstable period, the war in Ukraine and recent attacks on Israel, along with the global response to those conflicts, is a clear signal.

Increased political maneuvering in the Middle East and China and North Korea are also causes for concern, as are the supply chain disruptions in the tech industry, not to mention shipping challenges domestically and abroad, which are all signs that economic unrest is likely for the near to mid future.

Knowing that economic unrest is likely is one thing. Knowing how that economic unrest is likely to affect small businesses and the local economy around your small business is something else.

How War and Uncertainty Affect Small Businesses

Every small business is going to see different effects coming from global uncertainty. However, while the effects will be different, the fact that global unrest is going to affect small businesses is a certainty.

Some businesses, especially businesses that specialize in discretionary spending like luxury goods, services, and travel, are likely to see lower demand for their business as consumers tighten their purse strings.

Sometimes the effects of war and unrest can cause a temporary boost in these businesses as people actively make economic decisions meant to prop up the local economy. Generally, these extra sales will be focused on patriotic goods like US flags, or even Ukrainian flags, and the stores that stock them.

Long term though, uncertainty tends to lead consumers to want to spend less and save more, especially when gas prices and the price of necessary commodities like food and clothing are high.

Given the high price of gas and the recently elevated prices of staple foods like chicken and eggs, it is very likely that consumers will be more hesitant to spend until at least some of the sources of uncertainty are resolved.

How Local Businesses Can Prepare

Because global unrest is not something small businesses can directly affect, at least most of the time, it is important to prepare for the economic effects as much as possible.

Now is a good time to cut costs, while making sure you are not suffering quality losses or changes that could drive your customers to competitors.

Local business owners should also be prepared for higher interest rates and increased difficulty securing loans. While the federal government can and often does, intervene when global situations have a significant negative impact on the US economy, small businesses should not count on an intervention.

Not only are too many economic interventions in a row rare, but they also come with a risk of moral hazard. More importantly, many initiatives targeted at offering relief to the American economy may be harder for small businesses to access.

What Can We Do To Avoid The Worst Consequences?

The government is already working to ensure as much stability as possible, while also addressing existing conflict and the threat of ongoing conflicts in the years to come.

In the meantime, it is a good idea for local business owners to put an emphasis on customer service, and also to spread the word that supporting small businesses is a good way to help local communities and economies survive hard times.

It is also a good time to be particularly in touch with your customers. Try to check in and see if their needs have changed as a result of changed economic status. See if there are other things your customers want to see from you.

Most importantly, try to build a safety net so that you can operate as normal and try to get through any temporary downturns.