One thing: The small-business piece of the economic pie

One thing: The small-business piece of the economic pie 

One thing you need to know about market movers and shakers, plus a handful of headlines. 


One thing that moved markets  

... is the sentiment on Main Street, with small business owners’ optimism falling to the lowest in 9 months, according to the latest index from the National Federation of Independent Business (NFIB).1 

Market watchers may tend to focus on big public companies. But small businesses make up some 40% of the U.S. economic activity – or gross domestic product (GDP) – making owners’ sentiment is an important measure of economic health.2 

In February, the index registered its 26th consecutive month below the 50-year average.3 In other words, despite promising growth in the past few quarters, small business owners don’t feel great about the economy.  

Why not? In short: Inflation.  

Pricing pressures on mom-and-pops 

In the latest NFIB report, which analyzes responses from more than 600 small business owners across categories like hiring plans, sales expectations, and economic outlook, 23% cited inflation as their single most important problem in operating their business.3 

Per NFIB Chief Economist Bill Dunkelberg: “While inflation pressures have eased since peaking in 2021, small business owners are still managing the elevated costs of higher prices and interest rates.”  

Since peaking at more than 9% in June 2022, pandemic-era inflation has moderated to around 3%, just one percentage point above the Federal Reserve’s target rate of 2%.4 

In February, the headline figure for consumer pricing shows an increase of 0.4% month-over-month and 3.2% annually, both an acceleration from January’s figures.5 The monthly increase was also the highest since September, largely driven by an increase in energy prices and shelter.  

The struggle to manage expenses is a significant factor for any business; smaller ones with less financial cushion may be quicker to cut costs or close doors. If inflation persists and the Fed keeps rates higher for longer, elevated prices could remain a top concern for months to come. That means ongoing challenges for small businesses, the more than 60 million Americans they employ, and an economy that relies heavily on them.

Notably, labor quality – business leaders’ biggest concern in January – registered its lowest reading since April 2020, signaling the tight labor market may be easing. Still, 37% reported job openings they couldn’t fill.3 

And a few top headlines 

  1. GE Aerospace is investing roughly $650 million manufacturing facilities across the globe ahead of its spinoff this April, with the bulk of the operations going to the U.S.6 

  • In a push to strengthen domestic operations, the company is seeking to bring on more than 1,000 new workers nationwide along with the new spending. 

  1. $2.99 Trader Joe’s mini tote bags are being resold for as much as $500 on platforms like eBay and Facebook after going viral on social media.7 

  • The shoppers who snagged these in-demand bags may have found a temporary lucrative side hustle. Listing price is one thing; finding a willing buyer is another. And the clock is ticking: The grocer will restock this summer. 

  1. Eli Lilly is partnering with Amazon to deliver prescriptions directly to consumers.8 

  • Convenience and speed are driving forces shifting how people seek to obtain medicine for migraines, diabetes, weight loss, and more.

What to be on the lookout for next week 

Next week, the Federal Reserve will hold its two-day policy meeting, culminating with an interest rate decision. The Fed last raised rates in July 2023 and has opted to hold rate flats at 5.25%-5.50% in every meeting since.9

Markets largely expect the Fed to leave rates unchanged at this meeting as well. However, the language in the written decision or Chairman Jerome Powell’s accompanying speech might clue in investors as to when the next interest rate cut may occur. 

This March meeting is also noteworthy because it’s the last decision of the first quarter, meaning updated projections from Fed members on where they see the economy and interest rates headed. The last time the committee updated its economic projections was December, when it projected three interest rate cuts in 2024. This was a major catalyst for markets, helping to push the stock market to all-time highs in January.10

Since December, this year has held hotter inflation figures and stronger-than-expected jobs numbers, tempering market expectations of just how many cuts to expect this year. 

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1 Reuters, “US small business optimism falls to lowest in 9 months, NFIB says,” March 2024. 

2 U.S. Chamber of Commerce, “Small Business Data Center,” May 2023.  

3 National Federation of Independent Business, “Small Business Economic Trends,” March 2024. 

4 CNBC, “Why that ‘last mile’ of the inflation fight may be more challenging,” January 2024. 

5 U.S. Bureau of Labor Statistics, “Consumer Price Index – February 2024,” March 12. 

6 Axios, “GE Aerospace invests millions ahead of April spinoff,” March 2024. 

7 CNN, “These viral $2.99 Trader Joe’s tote bags are being resold for as much as $500 on eBay,” March 2024. 

8 Reuters, “Lilly partners with Amazon to deliver Zepbound and other drugs,” March 2024. 

9 CNBC, “Fed holds rates steady, indicates it is not ready to start cutting,” January 2024. 

10 CNBC, “S&P 500 rallies 1% to all-time high, surpassing previous record set in 2022: Live updates,” January 2024. 


The Currency editors

Staff contributors

The CurrencyTM, a publication from Empower, covers the latest financial news and views shaping how we live, work, and play. We keep you current on ways to plan, save, and invest for life.

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