Dive Brief:
- Small Business Sentiment: Optimism among small businesses declined last month due to persistent inflation, declining sales, and supply chain disruptions, according to the National Federation of Independent Business (NFIB).
- Top Concerns: Labor quality and availability are the primary challenges for small businesses, with inflation and taxes closely following. Almost 47% of small businesses report a shortage of qualified job applicants.
- Rising Costs: Mark Valentino, head of business banking at Citizens, notes that rising gas prices (up over 30% since the Iran war began) and new tariffs from Canada are increasing costs for small businesses.
Dive Insight:
- Consumer Concerns: Job market health is a top worry among U.S. consumers, with a 44.4% expectation of a higher unemployment rate by August 2027, the highest since April 2020.
- Job Growth: Despite concerns, U.S. employers added 162,000 jobs last month, keeping unemployment steady at 4.1%. Additionally, job figures for June and July were revised upward by 55,000.
- Perceived Job Security: Consumer perceptions of job security improved, with the likelihood of losing a job in the next year dropping to 13.8%, the lowest since February.
- Inflation Concerns: Fed officials are increasingly focused on inflation, exceeding the 2% target for over five years, with the U.S.-Iran war exacerbating energy costs.
- Price Increases: 31% of small businesses have raised their average selling prices, which complicates efforts to reduce inflation to the Fed’s 2% goal.
- Inflation Expectations: Consumers’ median inflation expectations for the next year and five years remain at 3.6% and 3%, respectively, while expectations for three years are slightly lower at 3.2%.
Key Statistics:
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Median Price Expectations:
- Gas: 4.6%
- Food: 5.3%
- Medical Care: 9.1%
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Oil Price Surge: Brent crude oil futures increased by 17.7% to $98.38 per barrel amid ongoing conflicts.
