Small Business Snapshot (May 15, 2023): Persistent Labor Shortages and Stubbornly High Inflation

Summary

A Small Business Snapshot for May 2023, dated May 15, 2023, reporting economic data on small businesses. It states that Consumer Price Index data showed inflation at 4.9 percent and core CPI at 5.5 percent, and that real weekly wages decreased 1.1 percent year-over-year. Its measurements section reports that at the end of March businesses were unable to fill 9.6 million jobs, that 253,000 jobs were created in April, and that the unemployment rate was 3.4 percent. It also gives the Department of Labor's figure of 264,000 initial unemployment claims for the week ending May 6, 2023.

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SMALL BUSINESS SNAPSHOT

MAY 2023

May 15, 2023

As we reach the halfway point of May, small businesses are continuing to struggle to keep pace with persistent labor shortages and stubbornly high inflation. The Consumer Price Index (CPI) data released last week showed inflation barely budged at 4.9 percent, slightly down from 5 percent from the month prior. Core CPI, which excludes the more volatile measurements of food and energy, remained largely unchanged at 5.5 percent. With this persistent inflation, real weekly wages decreased 1.1 percent year-over-year. The data is still a long way from the Federal Reserve’s goal of 2 percent inflation as it remains a top concern for Main Street America. While small businesses continue to deal with the effects of inflation, they are also struggling to find skilled workers to staff and grow their businesses. Both these issues have resulted in U.S. small business confidence falling to a 10-year low, according to the National Federal of Independent Business (NFIB) monthly Small Business Optimism Index, confirming the economic malaise many Main Street businesses are feeling. In addition, with the recent bank failures, community lending continues to come under renewed stress, especially as the Federal Reserve continues hiking interest rates at the fastest pace since the 1980s. Altogether, despite what President Biden may say about his administration’s handling of the economy and with his and Congressional Democrats’ $2.6 trillion in partisan spending, Main Street America remains pessimistic about the long-term small business economy.

The below May 2023 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 .4 percent in April as compared to March but totaled a 4.9 percent increase when measured over the last 12 months.

PRODUCER PRICE INDEX

Wholesale prices increased .2 percent in April and registered an increase of 2.3 percent year over year.

JOB OPENINGS

At the end of March, businesses were unable to fill 9.6 million jobs, 3.9 million workers quit their jobs, and layoffs increased to 1.8 million.

UNEMPLOYMENT RATE

253,000 jobs were created in April, and the unemployment rate changed little at 3.4 percent. 5.7 million Americans are unemployed.

LABOR FORCE PARTICIPATION RATE

The labor force participation rate remained unchanged at 62.6 percent in April.

UNEMPLOYMENT INSURANCE WEEKLY CLAIMS

For the week ending May 6, 2023, the Department of Labor reported that initial unemployment claims were 264,000, an increase of 22,000 from the previous week.

The 4-week moving average of initial claims totaled 245,250.

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