Signs of What Comes Next

The good news for most independent schools is that they survived the pandemic and, in some cases, are better off than before with PPP money in hand and larger enrollment in the seats. The picture for international schools is murkier and more region and country-specific. The bad news is that the significant challenges likely are immediately ahead. 

While we hate to rain on your garden party, Leading Thoughts wouldn’t be doing its job if it didn’t point out that the macro-economic, political, and social factors are far from favorable.

Inflation. The return of inflation, even if it does not sustain at 1970’s levels, initially dismissed by the Federal Reserve in the USA, now appears to be sticking around for at least the intermediate-term (and probably longer unless “quantitative tightening” actually works). Many of today’s parents have no experience with inflation, so the specter of 8+% price increases (meaning 10-12% tuition hikes) will be startling if not outright terrifying.

Geopolitical Uncertainty. To say “uncertainty” is to be polite; the hot war in Eastern Europe, the cold war between the USA and China, and the potential that all of this could spill over into neighboring countries or continents or, even worse, go nuclear, is not at all beyond imagination. That the hot war is now confined to Ukraine and the cold war to the realm of economics is little solace. Whether all of this is the birthing pains of a new world order remains to be seen.

Political and Social Instability in the USA. The 2022 midterm election looms this fall, and with it another round of tension within school communities about politics and social values. 2020 wasn’t pretty, and 2022 is shaping up to be even uglier.

Corporate Hunkering Down. Uber CEO Dara Khosrowshahi sent a letter to his staff describing how Uber is preparing for the future (trigger warning: Khosrowshahi’s letter is not optimistic about the future). In short, Uber plans to limit new hires (so, too, are Meta and Robinhood, among others), horde cash, and ride out the (coming) storm—a defensive posture, to be sure. One could dismiss this as a one-off response, except that many companies seem to be following the same strategy, if less publicly.

Toss the unpredictability of the COVID long tail into this mix and we have one fine kettle of fish at the present moment. The situation feels fragile, so plan accordingly.