Financial Strain on Small Businesses: Insights from the Latest US Economic Reports

Let’s look at some of the latest market conditions – and we have a bunch.

The Russell 2000 index lost approximately 3% during the previous seven days. This downturn comes as investors grapple with various concerns, including rising interest rates, inflation, and geopolitical tensions. The smallcap market has been a significant driver of growth in the US equity landscape and has recently faced headwinds. The S&P 600 is down 5.19% month to date.

Confidence among US small business owners has reached an 11-year low due to high inflation, hiring difficulties, and tight financial conditions. The small business optimism index dropped to its lowest level since December 2012, with inflation being the top concern for owners. The unemployment rate may have dropped, but 37% of owners reported unfilled job openings. Economist Mohamed El-Erian sees this drop in confidence as a sign of a looming slowdown in the US economy.

The latest Consumer Price Index report indicates that inflation in the US is higher than expected, potentially impacting plans to lower interest rates. The CPI rose 0.4% in March, with core CPI rising at an annualized pace of 4.5% in the last three months. This could lead to a shift in the Federal Reserve’s interest rate projections and limit the number of rate cuts this year.

But there is particularly good news for anyone with a small business and credit cards. Visa and Mastercardhave reached a major settlement with merchants to cut and cap credit card processing fees, resulting in expected savings of at least $29.8 billion for U.S. businesses. Merchants will have more flexibility in adjusting prices for goods sold via credit card, with fee rates expected to decrease over the next several years.

Why do we care?

A win for credit card fees is a win for most small businesses. Let’s take that. Now, before we overthink the market, let’s see what it means in technology. Onto that data.