Don't call it a comeback..I've been here for years!

If you're old like me and was a child of the Hip Hop era you'll appreciate the title of this article from the LL Cool J (Ladies Love Cool J) classic "Mama said knock you out!" where the rapper spits fire with "Don't call it a comeback..I've been here for years!"

Well, I'm not talking about the rap game but rather the global economy and in particular the US economy which precipitated the global economic downturn we've seen when it awakened from it's self-induced coma during the COVID-19 period vis-a-vis shutdowns/lockdowns.

Without re-prosecuting the causes of the global downturn it's generally accepted now it stemmed from a multiplicity of factors from latent consumer demand during the shutdowns, supply chain issues acutely felt in China, the epicentre of the COVID-19 epidemic plus over stimulus from central banks and more. Since the COVID-19 period the US has suffered from historically high inflation and plus a strong job market which in turn has prompted the Federal Reserve to sharply increase interest rates to try and cool a heating economy which in turn has caused a downturn in business and the economy in general. It had been feared the US was heading into a nasty recession rather than the "soft landing" the Federal Reserve was hoping for.

Inflation numbers released last week shows inflation has slowed to it's lowest increase in nearly two years, falling to an increase of 3%. Well down from the historic highs of nearly 10% but still higher than the Federal Reserve's target rate of 2%. So who cares you say? As the saying goes "When America sneezes, the world catches a cold" and I posit there is truth in the reverse "When America recovers, the world feels better". Conventional wisdom dictates that falling inflation will eventually lead to the Federal Reserve pausing and even reversing interest rate rises, probably in early 2024. This will likely lead to businesses beginning to expand and invest in their services, the housing market beginning to recover and the investment markets to improve dramatically from where they are at the present.

Using the "When America recovers, the world feels better" dictum it translates to better global economic conditions and in particular the venture capital and startup ecosystem. As a tech startup, it's a tough market to operate and raise capital. As a Venture Capital fund it's not that much easier. I am betting that as economic conditions improve and the US market in particular begins to be liquid again in terms of investment, the Australian startup ecosystem will again be on the rise as founders look to configure their companies for a US push. There will be bumps along the way, and the pace of recovery will vary from country to country as well as the size of returns will vary from sector to sector. However, the overall trend is promising.

To conclude and I'll paraphrase LL Cool J and say "Don't call it a comeback, the US economy has been here for years!" It's weathered storms before, I'm thinking of the global financial crisis, and it's weathering this one too. The dropping inflation numbers are a testament to the resilience of the US economy and a hopeful for the global economy. As we look towards the second half of 2023 and into 2024, I'm expecting a rebounding economy, not just in the US, but globally.

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Lani Refiti is a long-time business technologist, consultant and investor. He is the Founding Partner of Azcende, an Australian venture capital firm with a focus on national security.

Lani is also a Hip Hop/Rap tragic and is stuck in the 90's/2000's hey day of the genre. His kids hate the fact they have to listen to KRS One, Run DMC, LL Cool J, Jay Z and Nas everytime he drops them off at school.

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