With all the hoopla over CPI, the NFIB report didn't get its due this week.
Inflation pressures clear for many small biz as the need to raise wages to attract workers remains firmly in place and if anything ticked up. Not a good sign for JP's inflation focus areas.
Inflation pressures clear for many small biz as the need to raise wages to attract workers remains firmly in place and if anything ticked up. Not a good sign for JP's inflation focus areas.
NFIB covers small biz which are tilted heavily toward service industries, which makes it a good lens into JP's focus inflation categories.
Price increases have come down relative to history, but are still elevated and hard to come down further given labor cost pressure.
Price increases have come down relative to history, but are still elevated and hard to come down further given labor cost pressure.
An important reason for this dynamic is that hiring demand remains very robust for these businesses. Job openings have ticked up in recent months and remain elevated. That's consistent with the JOLTs though it is less extreme (and more realistic).
Earnings continue to be very weak for these businesses. What this suggests is that they are getting squeezed by rising labor costs but without the ability to pass on the fully to customers. That's important cause it the pressure to raise prices further is firmly in place.
These business make it pretty clear what the problem is. Inflation, labor costs, and labor quality.
If the Fed and JP are really focused on main street businesses, this survey suggests they aren't close to getting the job done.
If the Fed and JP are really focused on main street businesses, this survey suggests they aren't close to getting the job done.
One last thing I think is interesting. The interest rates paid by these firms has risen but it remains low. On par with 2018/19 and just a tad above the secularly low rates in the post-crisis period. Reflects a structural lowering of the costs of capital for these folks.
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