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Demand for financial analysts is growing due to the uncertainty of the US economy. In fact, the Bureau of Labor Statistics estimates that the demand for financial analysts will grow by 9% from 2021 to 2031, which is much higher than the average for all occupations. On top of that, the BLS predicts that there will be about 32,000 openings for financial analysts every year due to the high demand for these experts and the number of professionals exiting the labor force.
The expertise and knowledge of these professionals are crucial to businesses, especially as there is a risk that the country’s economy can go into recession anytime. Here’s a closer look below at why this is happening.
Companies are Struggling to Navigate Through the Economic Crisis
More businesses are trying to recruit financial analysts to recover from the economic downturns over the past few years. These financial analysts are necessary for company survival and growth, especially as the performance of the US economy continues to be mixed.
The economy grew by 2.9% in the last quarter of 2022, which is faster than consensus forecasts. However, an expert from Pantheon Macroeconomics, Ian Shepherdson, shared that the GDP growth mostly stems from inventory builds and foreign trade, which are not sustainable sources of economic growth. Meanwhile, businesses related to residential investments, exports, food, beverages, and motor vehicles have been heavily affected by notable drops in revenue. To illustrate, residential investments plunged as much as 26.7% due to the surging mortgage rates in the US.
In addition, the Federal Reserve raised interest rates, which can negatively impact various industries. For instance, grocery prices have already increased by 12%, while housing costs have increased by 7.1% in the past year. Due to these price increases, companies may struggle to afford the essential materials and operational costs for their business.
Understanding The High Demand for Financial Analysts
Businesses are still struggling with the negative impacts of the economic crisis of the past three years. As such, several companies are opening multiple positions for financial analysts who can help them navigate through the economic downturn.
While plenty of experts can boost a business’s revenue, financial analysts can help an organization focus on achieving financial growth and stability. This is why LHH outlines that a key responsibility of a financial analyst is to assess financial data and provide forecasting reports, which can help organizations prepare their future revenues and expenditures during tough economic times. Financial analysts also conduct industry research and gather data on various trends to assess which business ventures would be more profitable for organizations. These data are valuable during economic crises because businesses can easily evaluate where to invest their limited resources.
As such, it’s not surprising that organizations can improve their performance through the intervention of financial analysts. A study published by the British Journal of Management shows that financial analysts can increase a firm’s stakeholder orientation, address agency problems, and boost a firm’s CSR performance through their financial reports. By conducting analysis and preparing recommendations, financial analysts can improve the governance in businesses and help them meet their profit maximization objectives. Businesses can maximize profitable opportunities and improve areas that don’t drive revenue amidst financial crises through the data harnessed by financial analysts.
Experts believe that more economic downturns could occur in 2023. Thus, businesses need to work with financial analysts so that they can manage their resources and increase their revenues, even in the face of a possible recession.
