Ongoing inflation concerns amid hopes that price hikes have peaked, renewed supply chain disruptions, a potential drawback in discretionary consumer spending, a new push for equity at the Small Business Administration, and a bill for replenished restaurant aid are among the top business news items from the past week.
Has inflation peaked?
Inflation is continuing to raise concerns, including fears of a potential recession as the Federal Reserve’s plans to hike interest rates considerably. Consumer prices jumped 8.5 percent on an annual basis in March, while wholesale prices rose 11.2 percent. However, some economists believe that inflation has peaked, with prices decreasing in areas outside the more volatile areas of food and fuel.
Other recent news related to inflation:
- Inflation concerns eclipsed worries over labor shortages in the National Federation of Independent Business’s latest poll on small business optimism
- Higher prices are driving some Americans to delay retirement or return to the labor market
- More people are looking for gig work to increase their personal income in response to inflation
- Fed survey shows consumer bracing for higher household spending, but also expecting a long-term decline in inflation
Tighter controls renew supply chain issues
The reintroduction of strict COVID-19 controls in China is again putting pressure on global supply chains, while tighter inspection restrictions introduced by Texas Governor Greg Abbott are causing delays at border crossings with Mexico. White House economists suggest that supply chain disruptions are likely to persist due to persistent vulnerabilities and factors like climate change.
Retail sales rose 0.5 percent in March, driven largely by higher spending on items like groceries and gas. Though strong consumer demand has so far allowed companies to offset higher input costs by raising their own prices, businesses are also growing more mindful that shoppers might rein in their discretionary spending due to the higher cost of essentials. One sign of this uncertainty was seen in a major drop in sales at Bed Bath & Beyond in the fourth quarter of 2021, with the retail chain anticipating further uncertainty in part due to decreased consumer spending.
Equity push at the SBA
Along with more than 90 other federal agencies, the Small Business Administration has issued an action plan to improve equity in its programs. The plan aims to improve racial equity and support for underserved communities by strengthening access to capital, government contracting opportunities, disaster assistance, and small business resources such as counseling and training.
Renewed restaurant aid advances
The House of Representatives has passed a bill to replenish the Restaurant Revitalization Fund with $42 billion and provide an additional $13 billion to small businesses that suffered major economic losses due to the COVID-19 pandemic. Demand exceeded available funding for the grant program to support the food service industry, and the legislation would provide funds to 177,000 applicants that were eligible but did not receive grants. The measure will go before the Senate when it returns from a two-week recess.
Other business news items from the past week include:
- The Justice Department is using antitrust laws to pursue cases against employers accused of colluding to suppress workers’ pay
- As leases expire, more office space is becoming available as companies take the opportunity to shrink their physical footprint
- Venture capitalists are showing more interest in artificial intelligence companies, investing about $8 billion in 72 startups last year
- The Occupational Safety and Health Administration has introduced a new enforcement program to protect workers from heat hazards