Global Growth, Consumer Strain and Market Complacency: Three Signals Small Businesses Should Watch in 2025–26 

The global economy is throwing off mixed signals. Ships are moving; order books aren’t empty; and the Baltic Dry Index (BDI)—a proxy for worldwide goods flows—sits in the mid-range of its recent band. Yet household finances, especially in the US (which still sets the tone for global demand), are creaking under higher borrowing costs. Meanwhile, equity markets behave as if the “perfect outcome” is guaranteed: low inflation, steady growth, and rising profits. 

If you’re a small business owner in Greater Manchester, Cheshire, or Lancashire, that gap between market optimism and household reality matters. It shapes customer demand, pricing power, access to finance, and the valuations buyers and lenders will place on your business. Below I unpack three signals worth tracking over the next 12 months, how they interact, and what practical steps to take now. 

1) The Baltic Dry Index: “Goods Are Still Moving” 

The BDI tracks the cost of chartering dry-bulk ships (iron ore, coal, grains). Because it reflects real ships moving real stuff, it’s one of the cleaner read-outs of global industrial throughput. As of 20 October 2025, the index sat near ~2,070, roughly mid-to-high in its one-year range—evidence that trade in raw materials is holding up.  

Two nuances sit behind the headline: 

• Capacity is tight in places. Routing constraints, “slow steaming,” and port disruptions can squeeze supply, creating occasional spikes even if end-demand is only moderate. The Baltic Exchange itself emphasises how its daily route assessments capture these real-time frictions.   

• Forward markets imply bumpier months ahead. A recent Baltic Exchange investor note flagged a decent mid-summer but softer forward rates into late-2025 as China’s demand cools—reminding us the BDI is volatile and shipping-specific quirks can swamp macro signals.   

What it means 

• Mild global tailwind for goods-reliant sectors: engineering, advanced manufacturing, ports & logistics. A positive, if not spectacular, backdrop. 
• Intermittent input-cost pressure from freight spikes that can bleed into delivered prices—watch your landed costs. 
• Alarm bell, not a guarantee. Treat it as early smoke, not the full fire report. 

Bottom line: Industrial activity is not collapsing. But it doesn’t automatically mean the consumer is healthy. 

2) U.S. Consumer Credit: “The Driveway Check” 

The US consumer—the world’s demand engine—has been leaning harder on credit. The New York Fed’s Household Debt and Credit Report shows total household debt at $18.39 trillion in Q2 2025, up 1% in the quarter, with aggregate delinquency rates elevated versus pre-pandemic norms. Serious-delinquency transition rates have been broadly stable for autos and cards recently, but the overall credit picture bears watching.  

On cars—the “driveway check” that tells you how households are really coping—price and payment dynamics have been punishing. Wholesale used-vehicle values (Manheim Index) climbed through mid-2025, then showed uneven monthly moves into the autumn—a sign of a market still normalising but with affordability stretched by higher interest costs.  

Why accountants and owners should care 

• Payment fatigue: Larger monthly payments on longer terms increase the risk of missed payments if incomes wobble. 
• Knock-on demand: When households channel more cash to debt service, they spend less on discretionary retail, hospitality, and “nice-to-have” services—the core of many local SMEs. 
• Earnings sensitivity: Even if factories stay busy (Signal #1), weak consumer momentum caps revenue growth in B2C sectors and trims the upside in B2B firms tied to those end markets. 

Bottom line: The household engine is sputtering. It doesn’t scream “recession now,” but it reduces the margin for error if another shock arrives.  

3) Financial Markets: “The Expectations Machine” 

Here’s the puzzle: despite uneven real-world data, equity and credit markets often behave as if the best-case scenario is baked in—soft landing, gentle inflation, healthy earnings. The IMF’s October 2025 Global Financial Stability Report warns that stretched asset valuations and pressures in sovereign bond markets keep financial stability risks elevated, especially given the growing role of lightly regulated non-bank finance. In plainer English: prices may be running ahead of fundamentals, and plumbing risks haven’t gone away.  

High-profile market voices are also sounding cautious. Jamie Dimon (JPMorgan) has repeatedly flagged the risk of a sizeable correction in the 6–24 month window, citing uncertainty and narrow market leadership—even while remaining constructive on long-term AI productivity. It’s a reminder: optimism about tech doesn’t eliminate cyclical risk.  

Bottom line: Markets look priced for “pretty good.” If consumer softness deepens or policy shocks arrive, valuation air-pockets could appear.  

4) Three Engines, One Car: How the Signals Interact 

Think of the next 12 months as a car with three engines: 

1. Industrial/Trade (BDI) – still humming. 
2. Consumer/Household – straining under financing costs. 
3. Markets/Expectations – revving high with a thin margin for disappointment. 

The issue is dependency: Engine #3 assumes #1 and #2 keep pulling smoothly. If households downshift further, earnings in consumer-exposed sectors struggle, and markets may have to re-price to more realistic growth paths—even if ships keep sailing. 

Working base case 

• Global goods: “Ok-ish.” Infrastructure and policy support (especially in Asia) keep throughput adequate; shipping remains constrained enough to prevent a collapse.   
• Households: Slower spend where financing is heavy (autos, big-ticket retail), steadier where cash outlays are smaller.   
• Markets: More volatile and sensitive to earnings wobbles; valuation multiples vulnerable to disappointment, per IMF and bank commentary.   

5) Scenarios for 2025–26 (and what each means for SMEs) 

A) Soft Landing (30–40%)

Consumer stabilises; inflation behaves; central banks ease carefully. Goods flow fine; earnings muddle through. Markets drift or consolidate rather than surge. Action: keep investing, but stress-test cash and pricing. 

B) Rolling Slowdown (40–50%) – our central case

Household demand softens further; goods hold up; earnings disappoint in consumer-linked sectors; markets correct 10–20% and chop sideways. Action: build working-capital buffers; trim discretionary capex; tighten inventory turns. 

C) Hard Landing (10–20%)

Consumer credit stress goes systemic; a geopolitics/shipping shock hits; BDI slumps; markets drop 20%+. Action: preserve liquidity, negotiate covenants early, move to shorter planning cycles, prioritise variable cost structures. 

(Why these weights? Because BDI strength plus consumer strain plus IMF valuation warnings together argue for “growth that exists but feels patchy,” with lower market upside than price action implies. ) 

6) What This Means for Owners in Greater Manchester, Cheshire & Lancashire 

Here’s the practical bit—how to translate macro noise into day-to-day moves: 

Pricing & Demand 

• Segment your customers by financing sensitivity. Car-adjacent and big-ticket discretionary buyers are more fragile right now; B2B clients serving those households will feel the knock-on.   
• Consider narrow-band price adjustments tied to freight or input costs; avoid big swings that spook customers. Track landed cost per unit monthly (BDI spikes can leak into inputs).   

Working Capital 

• Shorten cash cycles: earlier deposits, milestone billing, automated credit control. 
• Inventory discipline: apply ABC analysis; set tighter reorder points but keep a strategic buffer for A-items if shipping wobbles.   

Financing & Risk 

• Stress-test your plan for a 10–20% sales dip and a 100–150 bps increase in borrowing spreads. If your sector is valuation-sensitive, assume lower exit multiples until markets digest the IMF’s warnings.   
• Fix a portion of debt where sensible; maintain undrawn facilities for optionality. 

Growth Bets (where the wind is behind you) 

• Trade-exposed manufacturing and specialist logistics can still grow from the BDI tailwind—focus on reliability and lead times.   
• Services firms (marketing, IT, compliance) should lead with cost-out and ROI-proofed offerings; client appetite shifts to efficiency wins when households are tight. 

Valuations & Deals 

• If you’re eyeing a sale or MBO, be realistic: buyers will look through a “perfect outcome” market lens to your customer mix, churn, and cash conversion. Build a data-room now; don’t rely on last year’s multiples if markets re-rate.   

7) A Simple “Macro Radar” You Can Run Monthly 

1. BDI level & 3-month change – quick industrial pulse.   
2. NY Fed Household Debt & Credit – consumer delinquencies (especially autos & cards).   
3. Manheim Used Vehicle Value Index – affordability temperature check.   
4. IMF/GFSR and major bank notes – valuation risks and plumbing stress.   

Pop these into a one-pager for your management meeting. If two or more flash amber, pause big capex, tighten cash management, and revisit pricing/stock. 

Final Take 

• Ships are sailing (BDI mid-range): industry isn’t falling off a cliff.   
• Households are stretched: rising balances and sensitive affordability limit the upside for consumer-linked sectors.   
• Markets are priced for “pretty good”: the IMF and senior bank voices think that’s optimistic. Expect more volatility and a thinner margin for error.   

For North West SMEs, that cocktail argues for disciplined cash, cautious optimism, and targeted growth rather than “business as usual”. 

How CCM Can Help 

At CCM | Carter Collins & Myer, we help owner-managed businesses translate macro signals into practical plans: cash-flow playbooks, pricing frameworks, inventory rules, funding reviews, and exit-readiness under different market scenarios. 

Want a 45-minute Macro-to-Action session? We’ll map these three signals onto your numbers and leave you with a 90-day action list tailored to your business.