May 5, 2022
Executive Vice President, Chief Policy Officer, and Head of Strategic Advocacy, U.S. Chamber of Commerce
Vice President and Editor-in-Chief, CO—
Inflation and supply chain issues have been at the forefront of many small businesses’ challenges throughout the U.S. as inflation reaches a 40-year high. Inflation has made it difficult for small businesses to thrive, with products, including gas prices reaching record highs.
During an April 2022 Small Business Update hosted by CO— by the U.S. Chamber of Commerce, experts addressed the historically high inflation rates while highlighting available resources for the growing number of entrepreneurs across the country.
Shifting Consumer Demands’ Have Had an Impact on Inflation
As the economy reaches new heights, many entrepreneurs struggle with the impact inflation has on their small businesses.
“Entrepreneurship is one of the strongest forces powering America's historic economic recovery today,” said Isabella Casillas Guzman, U.S. Small Business Administration administrator. “We're in the midst of a small business boom, as Americans launch businesses at record rates. In 2021 alone, 5.4 million Americans applied to start a business — more than 20% higher than any previous year on record.”
Neil Bradley, Executive Vice President, Chief Policy Officer, and Head of Strategic Advocacy at the U.S. Chamber of Commerce, described how businesses have responded to the rising prices nationwide.
In a survey conducted by the U.S. Chamber of Commerce, along with partner MetLife, “two-thirds [of small business owners] reported that they are being forced to raise prices” to respond to inflationary pressures, according to Bradley. He described how a shift in consumers’ spending habits, plus an excess of funds, has played a major role in the supply chain disruptions and the rise of inflation in the country.
“Largely as a result of Federal Reserve policies over a number of years and the fiscal stimulus provided by Congress, Americans have over $2.5 trillion of excess savings, compared to what they would have had if we'd stayed on baseline before the pandemic,” Bradley said. “All of that money is bolstering increased consumer demand.”
New Negotiations Could Challenge Improving Supply Chain Problems
Across the United States, businesses of all sizes felt the impact of supply chain disruptions as they were forced to halt production while waiting for goods. Although some of the kinks have been worked out, new problems may continue to delay supply chain efforts.
“We haven't been able to get a lot of the inputs that you need to finish goods,” Bradley said. “I talked to a boat manufacturer… who has boats done and ready to go, except for the computer chip that they need to put in to control the throttle. So thousands of boats [are] waiting to be delivered until they can get that computer chip — and that's true in a lot of things that are being manufactured.”
Regarding wait times due to COVID-19 disruptions, increased number of goods, and lack of modernization, Bradley discussed the current state of America's ports.
“The good news is those wait times on ships, the number of ships anchored off, the delay in getting goods, has come down dramatically,” Bradley said. “The bad news is that we just entered negotiations between the port operators and the longshoreman for their contract renewal that's due by June 30. That's creating more uncertainty about whether we're going to see potential slowdowns at the ports, or even a full strike there, that might create new bottlenecks.”
Gaps in the Hiring Market Show No Signs of Slowing Down
Looking at hiring trends, Bradley explained there had been no signs of improvement yet.
“We set a new record — 11.5 million open jobs that employers of all sizes are trying to fill today in the United States,” Bradley said. “If you compare that to the number of people who are actually looking for work … you basically have two open jobs for every person who's looking for work.”
Due to a range of issues, such as early retirement, being a working parent, and restrictions on legal immigrant workers, many have yet to re-enter the workforce in 2022.
Looking at “the workforce participation rate — the number of people in the population who are either at work or looking for work — we're a full percentage point behind where we were in February of 2020 before the pandemic,” Bradley explained.
From the Series