We’ve all been experiencing higher prices for food, housing, and certainly at the gasoline pump. If these economic headwinds have raised concerns about how small businesses are being impacted, we have some fresh perspectives in the Spring 2022 Beyond the Trends report. Beyond The Trends offers a unique view of the small business economy based on what we see in the data. With up to date information on over 25 million active businesses and how they perform from a credit standpoint.
Here’s my quick take on what’s in our latest Beyond The Trends Report
The next 12 months will be filled with headwinds and mines for small businesses. These entities have been shoring up resources, operations, building in cost increases, and creating backup supplier networks as supply chain disruption and inflation will batter the ship through 2023.
- Consumers seek higher paying jobs, creating labor shortages in blue collar industries, as wage gains are being eaten away by increasing U.S. inflation.
- Transportation and the utility industries have seen a 69% increase in delinquent balances tied closely to the increase in U.S. inflation.
- A 4X increase in delinquent balances associated with mining as the US took steps to move away from fossil fuel.
- Commercial card lending grew 9.9% in the 4th quarter, even as delinquency rates began their upward climb.
Energy Takes Center Stage
Energy costs are hitting margins and impacting delivery of goods and services. US energy costs were up 27% in January according to the Bureau of Labor and Statistics. These costs have been rising sharply since March 2021 and will be exacerbated in the 1st quarter 2022 by global reaction to the Russian incursion in Ukraine. Energy supply chains will be disrupted by sanctions and higher transport costs.
Consumers and small businesses will feel the pinch of lower supply and higher costs. Inflation, outside this event and on the rise, will remain above the Federal Reserve target of 2% through the end of 2022, even as the Fed raises rates and begins to reduce their balance sheet. The US supply chain will be in a slow recovery mode as infrastructure stimulus and global markets return to capacity. Small businesses are adjusting to a high demand low supply market through 2023.