In the last week I have attended two different economic forecast presentations (one at the Executive Club, the other with the Association for Strategic Planning), where I heard 4 different economists (Diane Swonk, and David Hale) and prognosticators (Bob Froehlich, and Andy Busch) describe what the see in the year ahead for the US and world economies. I am not an economist and so what I’ve written here is my interpretation of what they predicted, not predictions of my own.

The first observation is that the four predictions I heard had widely varying views. I don’t remember a time when I have seen more divergent opinions about what the future holds. This reflects significant uncertainty that exists in the marketplace, political uncertainty, uncertainty with global markets, and some uncertainty about how businesses and individuals are going to react to these forces.

The political uncertainty is perhaps most obvious. Massachusetts seems to have put a nail in the coffin of the healthcare reform bill (as it stands right now), but the administration needs to pass something, so changes in how the country handles healthcare (17% of the US economy) stand as a significant uncertainty in the short term. Once congress gets through the healthcare debate, they will move on to environmental reform (cap and trade) and questions about what to do with the expiring Bush tax cuts. Additionally of the $700B+ in stimulus money approved, only about $250B has been spent, so the government is also wielding further stimulus opportunities. Each of these has a huge impact on businesses of all sizes, but in concert they make it very hard for business leaders to have confidence in making decisions for the future.

With all this uncertainty it is difficult for businesses and individuals to spend money. In fact, both businesses and individuals have stopped spending money for most of 2009. Corporate profits are up, and corporate balance sheets are strong. In 2009 large companies saw net cash influxes of over $250B, five times what we would see in a normal year. Households have been paying off debt and the net household savings rate has gone from -1% to +4% or so. But with the economy improving and inventories growing that may change.

Still there are some pieces of good news. Everyone seems to agree that the economy grew in 4Q09, maybe as much as 4% – 5%. Some of that was stimulus related (Cash for Clunkers, etc.) but some if it was building inventory. This is a very positive sign and 3 out of the 4 economists that I heard felt like that trend would continue through the first half of 2010. Particularly strong sectors are healthcare (despite the reform bill) and exports. With another $500B of stimulus still to be spent, the economy should have a bit of a tail wind for two quarters or so.

The world economy has recovered much more quickly than the US and with record level deficits and near 0% interest rates we should see the dollar continue to weaken through the year making US goods highly competitive on the world market. This trend has a chance of pulling the US out of this funk. However, a weak dollar is not in the best interests of the rest of the world, and could eventually set the stage for strong inflationary pressures in 2011 and so the Fed is likely to issue a token (1/2 point or so) rate increase toward the end of the year.

China is now the largest consumer of commodities in the world, and their economy’s strong growth (over 10%) is holding the prices for metals, and oil, high. Can China keep up this growth pace without triggering inflation, or a currency revaluation?

So how do we know which of the forecasts is right? I’d suggest watching some key indicators. Now that the Obama administration has suffered some defeats, and have a better understanding of the constraints that they are under, do they shift back toward the center? If so, expect stronger second half growth. David Hale suggested that the Administration was floating the idea of extending the Bush tax cuts “as is” until 2012. This would have a horrible effect on the deficit, but would be stimulative in the short term. China needs to continue to tighten the reigns on their economy to control growth and keep commodity prices reasonable. Do they continue to raise interest rates, or go further and revalue their currency? Lastly, in the face of significant unemployment and uncertainty, do US households go back to spending some money, or do they continue their efforts to de-leverage and save? Any of these would increase the likelihood of expansion this year.

One other trend to watch; State and local governments need to raise money, in some cases a lot of it. They have a limited ability to raise taxes in this environment, so we will likely see a move toward selling more assets. Chicago is ahead of the curve on this trend with the parking meter sale, the Skyway sale and the attempted sale of Midway Airport. Arizona even tried to sell their statehouse last year. Outside the US the majority of airports are owned by for profit operators, the US should start to follow that trend in the next couple of years.

So what should you do now? If you sell to large companies, and particularly if you are selling goods or services that improve efficiency, you should hit those customers hard now. Large companies have cash and they have laid off a lot of people. They want to do more with less, if you can help them to do that they will spend right now. If you have customers who are exporters, their business is likely to pick up in the short term. We should see hiring and expanding inventories to support that growth. Healthcare has strong underlying fundamentals, and as long as the healthcare reform bill creates a straightforward path to get paid, these businesses should continue to grow effectively. If you are not positioned in one of those industries, look for the companies in your niche that do have exposure there and chase after them. There are always healthy companies in any economy, we just have to find them.

It’s going to be a wild ride in 2010, and there may still be a lot of pain, high unemployment and slow growth for the next 12 months or so, but the dark days are behind us and we should start to shift our focus forward. I urge you to move from a defensive stance and begin the process of aggressively expanding your sales and marketing efforts toward those sectors seeing growth. Get help from a professional sales coach, or create a more comprehensive marketing plan to capitalize on this window of positive momentum to grow your business while your competitors are still hiding in their caves.

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Brad Farris is a small business advisor with Anchor Advisors, Ltd. in Chicago, Il. Since 2001 Anchor Advisors has been helping creative professional firms to grow, by helping them clarify their purpose, get the most from their people, keep their eye on key performance measures, and implement consistent processes.