In the month of August, small businesses continue to face top issues like inflation and labor shortages. The Consumer Price Index (CPI) data released earlier this month showed the inflation rate is currently sitting at 3.2 percent, compared to 3 percent last month. Core CPI, which excludes the more volatile measurements of food and energy, decreased 0.3 percent. While small businesses continue to deal with the effects of persistent inflation, they struggle to find skilled workers to staff and grow their businesses. The National Federation of Independent Business (NFIB) monthly Small Business Optimism Index increased 0.9 percent, marking the 19^th straight month below the 48-year average of 98 percent. The last time the index was at this historic average was in December 2021. Small businesses continue to feel the pain of Biden’s inflationary spending, with prices up 16.9 percent since he took office, and 52 percent report increased interest rates are impacting their business. Higher interest rates aren’t only impacting loans, but credit cards as well, with 73 percent of small business owners having a personal credit card and 61 percent using them to pay for business-related expenses. With credit card debt hitting $1 trillion, small business owners may find themselves in increasingly difficult financial situations as interest costs accumulate. Despite the increase in the NFIB Small Business Optimism Index, there remain troubling signs ahead as inflation remains persistently elevated and margins continue to shrink.  

The below August 2023 Small Business Snapshot features numbers and updates to provide more insight into the current small business economy.

MAIN STREET MEASUREMENTS:

CONSUMER PRICE INDEX (INFLATION)

• The prices consumers paid for goods and services increased 0.2 percent in July as compared to June but totaled a 3.2 percent increase when measured over the last 12 months.

PRODUCER PRICE INDEX

• Wholesale prices increased 0.3 percent in July and had an increase of 0.8 percent year over year.

JOB OPENINGS

• At the end of June, businesses were unable to fill 9.6 million jobs, 3.8 million workers quit their jobs, and the number of layoffs and discharges changed little.

UNEMPLOYMENT RATE

• 187,000 jobs were created in July, and the unemployment rate decreased slightly to 3.5 percent.

LABOR FORCE PARTICIPATION RATE

• The labor force participation rate remained unchanged at 62.6 percent in July.

UNEMPLOYMENT INSURANCE WEEKLY CLAIMS

• For the week ending August 5, 2023, the Department of Labor reported that initial unemployment claims were 248,000, a 21,000 increase from the previous week’s level.
  • The 4-week moving average of initial claims totaled 231,000, an increase of 2,750 from the previous week’s average.

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