First Trust Advisors chief economist Brian Westbury responded to Federal Reserve Chairman Jerome Powell, saying he would not resign if President-elect Trump asked to “make money.”
The backbone of the US economy — America’s small businesses — may collapse beyond repair without some serious intervention, a new study by private digital lending bank Biz2Credit shows.
Data from the study was pulled from more than 100,000 financing applications submitted to Biz2Credit between January 2022 and December 2024, and shows a sharp decline in small business profits towards the end of 2024, a trend the bank sees continuing into 2025.
The study highlights concerns about the economy after four years of so-called “Binomics,” or President Biden’s policies that involve taxes and regulations on the business community while providing tax incentives to some targeted industries that are in line with his progressive agenda. Despite strong headline figures for GDP growth and lower unemployment, issues such as inflation and regulatory costs have affected certain sectors of the economy harder than others.
Inflation rose 2.9% in December, in line with expectations
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“Small business owners are in for a rollercoaster ride in 2024. Profits grew through July and declined every month through December,” said Rohit Arora, CEO and co-founder of Biz2Credit. “Average monthly income was down about $68,000 compared to 2023 and was also lower than it was in 2022.”
The reason for the decline, according to Arora, is that small businesses do not have the scale to spread costs over a large balance sheet, and are most affected by inflation, which, although falling, has led to higher prices for goods that are not priced. R.
The incoming Trump administration has pledged to ease regulations and taxes on small businesses to restore the growth lost during the Biden years.
“Trump was elected on his promise to fix the economy, and he says that will be a priority from day one,” Arora said. “Based on our data in the final months of 2024, the start of 2025 could be tough for small businesses.”
Small business optimism jumps to six-year highs after Trump’s win
President Donald Trump waves his fist after speaking in the East Room of the White House, early Wednesday, November 4, 2020, in Washington, with Vice President Mike Pence and First Lady Melania Trump in attendance. (AP Photo/Evan Vucci)
The survey shows, for example, that small businesses suffered a 43% drop in profits during 2024. The average monthly income of companies surveyed during the first 11 months of 2024 was $86,809 compared to $150,000 in 2023 – It is the worst annual average since 2020. One of the main problems facing small businesses is the persistence of high prices. Business-related costs increased significantly with average monthly expenses reaching $664,525 compared to $364,292 the previous year.
Although inflation has been trending downward since June 2022 when it reached a staggering 9.1% (Wednesday’s CPI report showed inflation rose to 2.9% in December, up slightly from the previous month), the overall costs for small businesses In the form of rent, insurance and employment are still high, and some are increasing.
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On a bright note, the National Federation of Independent Business (NFIB) published its latest Small Business Optimism Index on Tuesday, showing that optimism on Main Street jumped 3.4 points to 105.1 in December. This represents the highest reading since October 2018, as small business owners hope for improving economic conditions under Trump.
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