While the Biden administration continues to tout the benefits of Bideneomics, the reality is different on Main Street. High inflation and high interest rates are having an impact on economic activity, and smaller firms are taking a hit because of it.
According to a release from Goldman Sachs (NYSE:GS) and its 10,000 Small Businesses initiative, 76% of smaller firms are NOT seeing an increase in holiday sales and more than half (55%) state profit margins are declining. Meanwhile, President Joe Biden is telling businesses to stop gouging consumers…
Goldman states that while Federal Reserve data shows inflation slowing, it is still going up – just not as fast as before. This hurts small businesses as well as consumers.
Goldman adds that 70% of small business owners said the state of the economy and their financial outlook was negatively impacting their own household’s purchasing power and personal spending plans for their families this holiday season.
At the same time, 82% of small business owners said they have been forced to raise prices in the past year, and 66% said they’re finding it difficult to absorb inflationary pressures and keep prices low.
Additionally:
- 67% said consumers seemed to have less disposable income
- 67% said the economy is tougher in 2023.
- 32% said they were unable to compete with discounts offered by larger companies
- 31% said more consumers were shopping online, making it harder to reach them.
- 22% said they would have to delay reinvestment in their business
- 21% said they would have to lay off workers or curtail hiring plans
- 13% would need to seek a loan or line of credit to make up the difference
- 12% said they would be forced to take a personal pay cut
Goldman’s data is probably part of the reason Biden’s poll numbers to tank. The spend-big approach by the Administration (and the spending during the last Administration) has fueled inflation, and the Fed had to do what was necessary to stamp it out. The average consumer and small businesses are collateral damage to the policy.