Main Road remains resilient despite the progressively lengthy listing of challenges and countercurrents it ought to contend with. SMB owners and personnel have an more and more lengthy list of troubles to contend with: Customer price ranges improved at the greatest price in 40 years in June. On the employment and choosing fronts, some of the premier and most well known international businesses declared layoffs, employing freezes, or selecting slowdowns. Client self-confidence and sentiment are lessen.
Industry experts also now estimate a increased probability of a economic downturn within the following calendar year given the influence of inflation on corporate earnings and Fed policy imperatives. Wall Avenue analysts continue to lessen earnings and benchmark index estimates. Bellwether corporations this sort of as Walmart have lowered their earnings estimates citing slowing consumer retail profits. Jobless claims carry on to increase and are now at the best weekly degree considering the fact that November 2021. Constructive news involves falling commodity selling prices, including for oil decreased house loan and curiosity rates and a even now sturdy using the services of sector.
Our possess key Major Street Health Metrics for July uncovered some softening in hours worked (a reduction of about 12%) and staff members working relative to June. However, these metrics keep on being higher relative to January of 2022 and compare favorably to the pre-pandemic period.
Principal Street Wellbeing Metrics
(Rolling 7-working day ordinary relative to Jan. 2022)
Nominal typical hourly wages are up pretty much 10% considering that the beginning of 2021. Average (nominal) hourly wages in mid-June remained close to 10% over estimates from January of 2021. Proof from mid-July indicates that wage inflation greater moderately relative to June and has not stored up with inflation.
Per cent transform in nominal common hourly wages and CPI Purchasing Electricity of the Client Greenback relative to January 2021 baseline1
1. Nominal common hourly wage modifications and the (regular monthly) CPI for all City People: Paying for Electrical power of the Customer Greenback in U.S. City Regular (non-seasonally adjusted) calculated relative to a January 2021 baseline. Resources: Homebase facts, U.S. BLS.
Most employees are anxious about a economic downturn there is some variation based mostly on political orientation. Based on a pulse study of roughly 700 employees conducted in mid-July, we identified that workforce are either pretty (32%) or to some degree (47%) concerned about a recession. There is, even so, some variation (from an general high baseline) dependent on political orientation. Nearly 90% of those people who determine as either particularly liberal or liberal are either quite or considerably concerned about a recession. For moderates, the figure is 82.5% and for conservatives it is 81.4%. These who most popular not to determine their political orientation were being comparatively much less anxious about a economic downturn at a still superior 76%. A person doable explanation is the perceived impression the economic system may perhaps have on the November elections.
Study query: Are you anxious about a recession?
Supply: Homebase Personnel Pulse Survey. LR-Chi Square = 24.5, p < 0.004
Maybe my current job is not so bad? Macro-economic and social forces have changed how employees regard their current jobs and alternative job options. 49% of employees surveyed in July indicated they do not intend to search for a new job in the next one to two years. This compares with 41% in January of 2022 and 39% in November 2021.
Survey question: Do you intend to look for a new job in the next 12-24 months?
Source: Homebase Employee Pulse Surveys. Ns = November (2324), January (548), June (1767), July (710).
The cost of gas is the item most impacted by inflation. Food costs and rent or mortgage round out the top three categories. Consistent with CPI data, the cost of gas was cited most frequently (50%) as the category most impacted by inflation. The cost of food cooked in one’s home was ranked first by approximately 20% of employees, followed by rent or mortgage costs (approximately 13%). As one employee put it:
“I can’t afford anything. Anything. Prices are so high and I was barely scraping by as it was.”
Survey question: Which of your monthly costs have been most impacted by inflation?
Source: Homebase Employee Pulse Survey.
Most employees are concerned about a recession they are also taking steps to prepare for one. To prepare for a possible recession, employees are building up savings (54%) and paying down debt (17%). Interestingly, however, only 5% are cutting down on entertainment (e.g., going to movies, amusement parks), eating out at restaurants (3%), or travel (<1%). These findings are consistent with recent reports indicating continued consumer strength in these categories. Finally, less than one percent of employees indicate that they are looking to switch to lower priced products/services to prepare for a recession.
Survey question: Which steps, if any, are you taking to prepare for a recession?
Source: Homebase Employee Pulse Survey.
Much like their hourly employees, most owners are concerned about a recession. A July pulse survey of approximately five hundred owners reveals the ubiquity of recession fears.
Survey question: Are you worried about a recession?
Source: Homebase Employee Pulse Survey.
Given the ubiquity of recession fears, most owners do not plan on opening new locations. Results from July 2022 resemble results from January 2022 when Omicron impacted business (planning). From June to July 2022, the percentage of owners who intend to open a new location in the next one to two years decreased by approximately 3 percentage points with a corresponding increase in the percentage of owners who indicated they do not intend on opening a new location in the corresponding period.
Survey question: Do you intend to open a new location of your business in the next one to two years?
Source: Homebase Employee Pulse Survey.
Owners’ hiring intentions for the next one to two years are changing. However, the vast majority of owners intend to hire and the overall average implies a headcount increase of 30%. Most small business owners intend to hire additional employees in the next one to two years. However, since January of 2022, a pattern is emerging where an increasing percentage of owners are either planning on making no additional hires or are planning on significantly increasing headcount. The percentage of owners who now intend to make no additional hires increased more than 37% since June and nearly tripled relative to January. On the other hand, approximately 21% of owners plan on hiring eleven or more employees.
Survey question: How many additional workers do you intend on hiring in the next one to two years?
Source: Homebase Employee Pulse Survey.
Twenty-seven percent of owners ranked the price of raw ingredients or intermediate goods as the cost that has been most impacted by inflation. The cost of gas was a close second (25%), followed by employee salary costs (18%). The cost of electricity (11%) and construction materials (6%) round out the top five. As one owner put it:
“Increase in prices for raw ingredients, supply chain issues and shortages of many items, combined with the now due payments will have a large negative impact on my business.”
Survey question: Which of your monthly costs have been most impacted by inflation?
Source: Homebase Employee Pulse Survey.
Most owners are concerned about a recession they are also taking steps to prepare for one. To prepare for a possible recession, owners are taking similar steps as their employees: First, they are building up savings (39%). Second, they are paying down debt (16%). Third, they are reducing employee work shifts (9%). Less than 0.5% of owners are preemptively laying off employees to prepare for a possible recession.
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