Hedging an Uncertain Global Economy with Government Contracts

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The current economic backdrop looks grimmer and even more uncertain than ever as the DOW Jones Industrial tanks alongside other international indices like the DAX, NIKKEI 225, and the EURO STOX 50. At the epicenter of this market correction, of course, is the COVID-19 pandemic crisis. The coronavirus that arrived on the scene in January has been causing global panic for months now, as the rate of infection and deaths increases daily.

Meanwhile, demand for goods and services worldwide has severely contracted, as governments and health agencies encourage and in some cases mandate people to stay home and avoid public interaction at all costs. Roads and highways are experiencing far less traffic than usual, commercial airlines are running with empty seats, hotels on average are seeing only 20% occupancy, and restaurants are skating by on take-out business. Even worse for the economy, though, factories all over the world have been temporarily shut down, which in turn has severely impacted supply chains.

This dynamic can be blamed for squeezing companies from both ends, negatively impacting both real demand and available supply. Unfortunately, the longer the pandemic lasts, the more intense the efforts will become to contain the virus, thereby triggering even more profound economic effects.

China has easily been hit hardest by the virus, and is on track for its first economic contraction since the 1970s, which is then creating ripple effects throughout the global economy. As the number of worldwide cases has grown, governments outside of China have been forced to announce even more restrictions, which is bringing increasingly more pain to the global economy as each day passes with no real solution in sight. Experts warn us that if the virus becomes more widespread and extends past April or even May, then the chances of a recession in the United States, Japan, and Europe become ever more likely … and perhaps even inevitable.

For companies seeking to diversify their revenue streams during turbulent times like these, pursuing government contracts is by far the most advantageous course of action. The fact of the matter is, those businesses who have already heavily invested the time and energy required to land government contracts, particularly GSA schedules, are not feeling the weight of this pandemic in the same way most others are. But even for those who haven’t, it is never too late to get started.

 In 2018, the federal government alone awarded $105 billion in prime contracts to small businesses (read the full story), according to the U.S. Small Business Administration (SBA). For companies that provide the kinds of services the government needs, this is potential and stable revenue growth that’s just sitting on the table. So what are you waiting for?