Main Street remains resilient despite the ever-longer list of challenges and setbacks it must contend with. SMB owners and employees have an ever-longer list of challenges to deal with. highest rate 40 years in June.Some of the largest and most prominent global companies in terms of employment and employment announced layoffs, hiring freeze, or a slowdown in employment.consumer confidence When emotions It is low.
Experts now estimate recession likely within the next year Given the impact of inflation on corporate earnings and the Fed’s policy imperatives. Wall Street analysts Downgrade earnings and benchmark index estimatessuch as Bellwether walmart We have lowered our earnings guidance, citing slowing consumer retail sales. Unemployment claims continue to rise And it is now at its highest weekly level since November 2021. Positive news includes falling commodity prices, including oil. Lower mortgages and interest rates. And a still strong job market.
Our own key Main Street Health Metrics for July revealed some softening in working hours (down about 12{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}) and headcount compared to June. However, these metrics remain high compared to his January 2022 and favorable compared to the pre-pandemic period.
Main Street Health Index
(7-day moving average, compared to Jan 2022)
Nominal average hourly earnings to rise by almost 10{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c} from early 2021Average (nominal) hourly wages in mid-June were about 10{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c} higher than estimates from January 2021. Evidence from mid-July suggests that wage inflation has picked up moderately compared to June and is not keeping up with inflation.
Percent change in nominal average hourly wages and CPI purchasing power in consumer dollars compared to the January 2021 baseline1
1. Change in Nominal Average Hourly Earnings vs All City Consumer (Monthly) CPI: Purchasing power of consumer dollars in US city averages calculated relative to January 2021 baseline (non-seasonally adjusted) . Source: Home Data, US BLS.
Most employees fear the recession. There are several variations based on political orientation. Based on a pulse survey of nearly 700 employees conducted in mid-July, we found that employees are either very (32{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}) or somewhat (47{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}) concerned about the recession. However, there is some variation (from an overall high baseline) based on political orientation. Nearly 90{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c} of those who identify as extremely liberal or liberal are very or somewhat concerned about the recession. Moderates are 82.5{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}, conservatives are 81.4{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}. Those who prefer not to specify their political orientation remained high at 76{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c} and were relatively unconcerned about the recession. One possible explanation is the perceived impact the economy could have on the November election.
Survey question: Are you worried about a recession?
sauce: A pulse survey of home-based employees. LR-Chi Square = 24.5, p < 0.004
Is your current job not bad? Macroeconomic and social factors are changing how employees perceive current and alternative work options. 49{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c} of employees surveyed in July said they do No I will be looking for a new job within a year or two. This compares to 41{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c} in January 2022 and 39{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c} in November 2021.
Survey question: Are you planning to look for a new job in the next 12-24 months?
sauce: A pulse survey of home-based employees. Ns = November (2324), January (548), June (1767), July (710).
The cost of gas is the item most affected by inflation. Food and rent or mortgage round out the top three categories. Consistent with the Consumer Price Index data, gas costs were cited most frequently (50{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}) as the category most affected by inflation. Nearly 20{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c} of employees ranked the cost of home-cooked meals first, followed by rent or mortgage costs (about 13{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}). As one employee said:
“I can’t afford anything.
Survey question: Which of your monthly costs were most affected by inflation?
sauce: A pulse survey of home-based employees.
Most employees fear the recession. They are also taking steps to prepare for it. Employees are building up savings (54{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}) and paying off debt (17{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}) in preparation for a possible recession. Interestingly, however, only 5{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c} of him cut back on entertainment (such as going to the movies or an amusement park), eating out at restaurants (3{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}), or traveling (less than 1{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}). These findings are in line with recent reports showing continued strong consumer performance in these categories. Lastly, less than 1{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c} of employees are willing to switch to lower priced products/services in preparation for a recession.
Survey question: What steps are you taking to prepare for a recession?
sauce: A pulse survey of home-based employees.
Like hourly employees, most owners are concerned about the recession. A July Pulse survey of about 500 owners found recession fears everywhere.
Survey question: Are you worried about a recession?
sauce: A pulse survey of home-based employees.
Given that recession fears are everywhere, most owners will No Plans to open new locations. The July 2022 results are similar to the January 2022 results when Omicron impacted business (plans). From June to July 2022, the proportion of owners intending to open a new store within the next 1-2 years dropped by about 3 percentage points, with a corresponding decline in those who said they would not open a new store. The proportion of owners who responded has increased. Corresponding period.
Survey question: Do you have any plans to open new locations in the next year or two?
sauce: A pulse survey of home-based employees.
Owner hiring preferences over the next 1-2 years are changing. But the majority of owners intend to hire, and the overall average means her 30{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c} increase in headcount. Most small business owners plan to hire additional employees within the next year or two. However, after January 2022, a pattern is emerging in which an increasing proportion of owners are either not planning to hire more or are planning a significant increase in headcount. The proportion of owners who do not plan to hire more has increased by more than 37{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c} since June, almost triple from January. Meanwhile, about 21{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c} of owners plan to employ 11 or more employees.
Survey question: How many more employees do you plan to hire in the next 1-2 years?
sauce: A pulse survey of home-based employees.
Twenty-seven percent of owners ranked the price of raw materials or intermediate goods as the cost most affected by inflation. Gas costs were a close second at 25{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}, followed by employee salary costs (18{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}). Electricity (11{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}) and construction materials (6{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}) round out the top five. As one owner said:
“Rising raw material prices, supply chain issues, and shortages of many items, combined with current payment deadlines, are having a major negative impact on my business.”
Survey question: Which of your monthly costs were most affected by inflation?
sauce: A pulse survey of home-based employees.
Most owners fear a recession. They are also taking steps to prepare for it. Owners are taking similar steps as employees to prepare for a possible recession. First, they are accumulating savings (39{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}). Second, they are paying off debt (16{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}). Third, we are reducing employee work shifts (9{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c}). He is less than 0.5{ea2cba5bdf6fe62bbe85e24807814144a71e77d3ae7311fbc27a008558d1372c} of owners preemptively laying off employees in preparation for a possible recession.
