The “Economy” and possible effects on Death Care

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I’m writing this article on Tuesday morning ahead of President Trump’s address to Congress and at a time when certain investors seem to have lost some faith in the markets as the Dow Jones Industrial Average is currently down over 700 points on the day.  The world can change between Tuesday and when you read this on Friday but I thought it a good time to bring some news that I’ve seen on the economy to Funeral Director Daily readers.

Before I get into some thoughts and articles others may have on the immediate economic future I will share with you  two things that enter my mind when digesting all the information available.

 

1. Before you cross a bridge, somebody needs to build the bridge.  When American soldiers closed in on Berlin at the end of World War II German soldiers in retreat “blew-up” bridges over rivers to make it harder to get to Berlin.  Before American soldiers crossed these rivers they had to build the bridges. . . taking some time and delaying the outcome.
2. For about 4 or 5 election cycles back in the 1980’s I served on the volunteer campaign board for my local United States Congressman.  He repeatedly told me “Perception win elections”.  Over the years, I’ve thought about that statement lots of times including when I ponder why people pick a certain funeral home or why they choose cremation over earth burial.. . . . In so many choices of people, I’ve learned it’s not always about “Reality”, but about “Perception”.

 

Where we are today shows a lot of uncertainty with the American economy.  Interest rates – higher for longer, Inflation – not being tamed as yet, Manufacturers raw material costs rising — the highest level since 2022, and Consumer spending dropping last month – the largest such drop in four years, Hiring — apparently slowing down.

Those items, and possibly others including the unknown effects of potential tariffs, have caused the Atlanta FED Gross Domestic Product (GDP) forecast to dip into negative territory for the first time in a period of time.

Recent Atlanta Federal Reserve Branch prediction of GDP

From my point of view, when America gets on the line of such “negative” thoughts, the perception of the American consumer and the potential outcomes of the economic situation is exacerbated by Americans reaction of holding on to their cash for a potentail downturn. . . .i.e “Perception becomes reality”.

Again, from my point of view, the Trump administration believes they are in the process of “building the bridges” that can make our economy stable for a period of time.  The reality of that thought process is that businesses cannot cross that “business river” until the bridges are built and the time between the onset of construction and completion can be a very unstable period.  It’s a period where I believe that the management of a company’s resources is very important to their long-term success and that discretionary management of resources needs to be thought through.

Tom Anderson
Funeral Director Daily

So, how do I think that thought process relates to Death Care?  My take, in a broad sense, is that when the American consumer “perceives” an economic downturn or a “tightenting of the belt” if you will, they become adverse to spending.  While that may mean putting off discretionary family purchases such as furniture, when it comes to mandatory expenditures such as funeral or cremation expenses, I think many people will lessen their spend. . . . . In essence, that situation of less spend comes at the worst time for funeral homes — a time of inflationary expenses for the business while at the same time bringing in less revenue (and margin) for the business because of this dynamic.

On the positive side of the equation, if you are a company with ample cash on hand you might be able to make capital improvements or purchase prodcuts at a discount because trades people and suppliers may be in the same situation of rising expenses and lower revenue and in search of revenue wherever they can find it.

Like so many decisions of a going-concern business, the management of resources at differing times can make a huge impact on the future success of the business.  My best advice is to make sure you know where your revenue is coming from and where it is going and make the well thought-out decisions on how you move forward.

Related —  Here’s some articles on the economy that I came across this week and were part of the thought process for this article:

More news from the world of Death Care:

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