First Trust Advisors Chief Economist Brian Wesbury hits back at Fed Chairman Jerome Powell, saying he won’t resign if President-elect Trump demands “Make money.”
The backbone of the U.S. economy — American small business — may be beyond repair without some serious intervention, a new study from digital private lender Biz2Credit shows.
Data from the study was drawn from more than 100,000 funding 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 lender sees continuing through in 2025.
The survey underscores concern about the economy after four years of so-called Bidenomics, or President Biden’s policies that include taxing and regulating the business community while offering tax incentives to some targeted industries that align with his progressive agenda. Despite strong GDP growth figures and low unemployment, problems such as inflation and regulatory costs have hit certain segments of the economy harder than others.
INFLATION INCREASES 2.9% IN DECEMBER, DESPITE EXPECTATIONS
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“Small business owners went on a roller coaster ride in 2024. Earnings rose through July and fell every month through December,” said Rohit Arora, chief executive and co-founder of Biz2Credit. “Average monthly earnings fell by almost $68,000 compared to 2023 and were also lower than in 2022.”
The reason for the decline, according to Arora, is that small businesses don’t have the scale to spread costs over a large balance sheet and have been hit hardest by inflation, which, although declining, has led to high prices for goods that don’t have t.
The incoming Trump administration has pledged to ease regulations and taxes on small businesses to regain lost growth during the Biden years.
“Trump was elected based 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 later months of 2024, the start of 2025 could be difficult for small businesses.”
SMALL BUSINESS OPTIMISM JUMPS TO SIX-YEAR HIGH WITH TRUMP WINNING
President Donald Trump pumps his fist after speaking in the East Room of the White House, early Wednesday, Nov. 4, 2020, in Washington, as Vice President Mike Pence and first lady Melania Trump look on. (AP Photo/Evan Vucci)
The survey, for example, shows that small businesses experienced a 43% drop in profits during 2024. The average monthly profits of businesses surveyed for the first 11 months of 2024 came in at $86,809 compared to $150,000 in 2023 – the highest average annual bad since 2020 A big problem for small businesses has been the continuity of high prices. Business-related costs have increased dramatically with average monthly expenses coming in at $664,525 compared to $364,292 a year ago.
Although the inflation rate has been trending lower since June 2022, when it hit 9.1% (Wednesday’s CPI report showed inflation rose to 2.9% in December, up slightly from the previous month), overhead costs for small businesses in the form of rent, insurance and labor remain high and some are increasing.
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On a bright note, the National Federation of Independent Business (NFIB) released its latest Small Business Optimism Index on Tuesday, showing that optimism on Main Street jumped 3.4 points to 105.1 in December. It marked the highest reading since October 2018, as small business owners hope for improved economic conditions under Trump.
