“Small businesses aren’t yet feeling the ripple effects of falling inflation, and they’re still skeptical that we’ll see rate cuts this year.” -- Andrew Crapuchettes, RedBalloon CEO
Consumer inflation came in at 3.0% according to today’s Consumer Price Index (CPI) report – falling more than economists had expected. This is the 39th straight month with inflation at 3% or more, but the 3rd consecutive month with declining CPI.
However, in a recent survey, small businesses said they aren't yet feeling the impact of falling inflation. When asked if they “feel the economy is turning a corner,” only 2% said things are moving in a positive direction, while 36.8% said things felt unchanged and 49% said they felt things had taken a turn for the worse.
This matches the July 5th prediction by Statista that the US economy would slip into recession in the coming months.
Also, despite 3 months of declining inflation, nearly half of all small business owners now expect the Fed to leave rates unchanged, a significant shift from the anticipation of rate cuts earlier in the year.
| Raise Rates | Lower Rates | Hold Rates Steady |
Feb-24 | 22.5% | 33.7% | 27.8% |
Mar-24 | 29.0% | 28.6% | 33.1% |
May-24 | 37.8% | 16.9% | 33.4% |
Jul-24 | 20.8% | 20.8% | 48.6% |
A sampling of written comments is revealing:
“[The economy] is definitely worse. My business is slower than ever,” wrote one survey respondent.
“The economy is in bad shape. People can barely pay their bills without working multiple jobs,” wrote another.
“Economy is slow. People are curbing their spending to save for food and pay their bills. As a local jeweler, we feel first when people lose discretionary money,” replied a third.
“Overall purchases are smaller and people are more cautious about spending,” wrote a fourth.
Likewise, 3 out of 4 small business owners are shelving plans for staffing changes, neither hiring nor reducing staff in another sign that the economy is not recovering.
“Businesses are definitely more choosey about their hiring,” said RedBalloon CEO Andrew Crapuchettes. “There’s not a lot of excess cash available for wrong personnel moves, and caution is the prevailing sentiment.”
Although skeptical about rate cuts, the small business community would gladly welcome such a move. Full survey results are available at jobs.redballoon.work/freedomeconomy.