Small Business Snapshot (January 17, 2024): Inflation Remains the Top Issue Small Business Owners Face

Summary

A Small Business Snapshot for January 2024, dated January 17, 2024. It reports that the Consumer Price Index rose 0.3 percent in December and was 3.4 percent over the last 12 months. It states that the National Federation of Independent Business Small Business Optimism Index increased by 1.3 points. It reports that 216,000 jobs were created in December, that the unemployment rate was unchanged at 3.7 percent, and that initial unemployment claims were 202,000 for the week ending January 6, 2024.

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SMALL BUSINESS SNAPSHOT

January 2024

January 17, 2024

In the month of January, inflation remains the top issue small business owners face as prices continue to rise. The Consumer Price Index (CPI) data, released earlier this month, showed the inflation rate is currently sitting at 3.4 percent year over year, up from last month, signaling that the Federal Reserve may have more work to do to bring inflation back to their two percent goal. Core CPI, which excludes the more volatile measurements of food and energy, increased 0.3 percent. 23 percent of small business owners reported inflation as their top problem, surpassing labor quality as the top issue. While the National Federation of Independent Business (NFIB) monthly Small Business Optimism Index increased by 1.3 points, it marks two consecutive years spent below the 50-year average of 98 percent. Small businesses have seen mixed signals surrounding price pressures, indicating small businesses will continue to struggle with prices that are over 20 percent higher than when President Biden took office. Meanwhile, future business outlooks remain depressed, with a net negative of 36 percent of small business owners expecting better business conditions over the next six months, up six points from last month but continuing to signal that Main Street remains pessimistic for the new year. While inflation rates have fallen from their 2022 peak, progress on bringing it down to the Federal Reserve’s two percent goal appears to be slowing. To fully begin the recovery, Main Street needs signs of inflation reaching the Fed’s goal and imminent rate cuts, neither of which appear set to happen in the coming months.

The below January 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 0.3 percent in December as compared to November and totaled a 3.4 percent increase when measured over the last 12 months.

PRODUCER PRICE INDEX

Wholesale prices fell 0.1 percent in December and had an increase of 1 percent year over year.

JOB OPENINGS

At the end of November, 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

216,000 jobs were created in December, and the unemployment rate was unchanged at 3.7 percent.

LABOR FORCE PARTICIPATION RATE

The labor force participation rate fell slightly to 62.5 percent in December.

UNEMPLOYMENT INSURANCE WEEKLY CLAIMS

For the week ending January 6, 2024, the Department of Labor reported that initial unemployment claims were 202,000, a decrease of 1,000 from the previous week’s level.

The 4-week moving average of initial claims totaled 207,750, a decrease of 250 from the previous week’s average.

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