In the month of April, inflation remained as a leading issue for small business owners, as it has shown to be consistently above the Federal Reserve’s target while the labor market has continued to outperform expectations, driving up the cost of labor. The Consumer Price Index (CPI) data, released earlier this month, showed the inflation rate is currently sitting at 3.5 percent year over year, up from last month and once again higher than forecast. Core CPI, which excludes the more volatile measurements of food and energy, increased by 0.4 percent. 25 percent of small business owners reported inflation as their top problem, with the net percentage of owners raising prices rising seven points from February to a net 28 percent. In addition to the worse-than-expected economic data, the National Federation of Independent Business (NFIB) monthly Small Business Optimism Index decreased even further by 0.9 points to 88.5, marking 27 consecutive months spent below the 50-year average of 98 and the lowest reading since December 2012. In addition to contending with persistent inflation, net sales expectations fell by another eight points to a net negative 18 percent, signaling a potential slowdown for small businesses in the coming months. While Main Street began the year with hopes of multiple rate cuts by the Federal Reserve, increasing inflation has delayed expectations for interest rate cuts to this summer at the earliest, with it becoming increasingly possible rates are not cut at all this year. Small business owners continue to express concern over how much inflation is eating into their profits, and with interest rates remaining elevated for the foreseeable future, Main Street will have to wait even longer to make meaningful investments.

The below April 2024 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 0.4 percent in March as compared to February and totaled a 3.5 percent increase when measured over the last 12 months.

PRODUCER PRICE INDEX

• Wholesale prices rose 0.2 percent in February and had an increase of 2.1 percent year over year.

JOB OPENINGS

• At the end of January, businesses were unable to fill 8.8 million jobs, 3.5 million workers quit their jobs, and the number of layoffs and discharges changed little.

UNEMPLOYMENT RATE

• 303,000 jobs were created in March, and the unemployment rate fell slightly to 3.8 percent.

LABOR FORCE PARTICIPATION RATE

• The labor force participation rate increased slightly to 62.7 percent in March.

UNEMPLOYMENT INSURANCE WEEKLY CLAIMS

• For the week ending April 13, 2024, the Department of Labor reported that initial unemployment claims were 212,000, unchanged from the previous week’s level.
  • The 4-week moving average of initial claims totaled 214,500, unchanged from the previous week’s average.

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