05/17/2024 | Press release | Distributed by Public on 05/17/2024 13:55
In recent months, the U.S. economy has been navigating various challenges, affecting both big and small players alike. Let's take a closer look at what's been happening and what it means for small businesses across the country based on the information in the Equifax May 2024 Main Street Lending Report.
Economic Growth and Jobs
The U.S. economy grew by 1.6% in the first quarter of this year. While this percentage was lower than expected, experts are still hopeful the economy will continue to grow at a steady pace. However, job creation has slowed down a bit. After a fast pace in the first quarter, fewer jobs were created in April - 175,000 fewer jobs, to be exact. Despite this number, the statistic is actually viewed as a positive sign that the economy is still on track for a soft landing.
Inflation Concerns
For many people, slower price growth would be a good thing. Prices have been going up faster in recent months, which has made inflation a top worry for small business owners. This concern is also likely a key factor as to why the Small Business Optimism Index is at its lowest since 2012. The Federal Reserve has also put off plans to lower interest rates, which means small business borrowing may stay expensive for the immediate future.
Financial Stress
Financial stress among small businesses has been growing due to lagging sales and high debt. The number of businesses struggling to pay debts has been going up steadily, and it's now almost as high as it was during the height of the pandemic. Many small businesses are also turning to credit cards for money, but with high interest rates, that's not an easy, long-term solution.
Consumer Spending
Consumer spending has been a big driver of economic growth, but there are concerns about whether it can keep going. While spending has been strong, it's been growing faster than people's incomes for a while now. This imbalance has caused people to save less money, which could eventually slow down spending. Small businesses are feeling cautious too, with fewer planning to hire new workers in the coming months.
What's Next?
Keeping an eye on these trends is important in understanding where the economy might be headed. While there are challenges, there are also signs of resilience.
Small businesses, like always, will need to adapt and find ways to navigate whatever comes their way.
Stay ahead of the trends by downloading our Small Business Indices, and don't forget to sign up for our monthlyMarket Pulse webinar to hear the latest insights from top experts.