SMBs and Economic Experts: A Disconnect on the State of the US Economy

For small business retailers, inflation isn't just a number; it’s a real problem that affects their operations and their bottom line. Even as reports of inflation going down make their way into headlines across the country, the average small business owner would disagree. According to FundKite's 2024 SMB Election Year Survey, over half (63 percent) of small business owners surveyed said they do not believe the economy is robust, despite experts saying the opposite. A large majority (77 percent) said inflation pressures wouldn't be solved by the end of the year — and we're only halfway through.

This difference between reported data and what small retailers see highlights a strong disconnect between what economic experts think they're seeing and what Main Street America is actually feeling.

It also showcases small business retailers’ immediate priorities involve relieving financial pressures rather than potential future improvements.

Data from FundKite’s SMB survey showed that 80 percent of small business retailers are concerned about inflation and high prices, as small business retailers don't have the financial cushion that larger companies do, making them more vulnerable to economic changes. Therefore, the current economic environment of uncertainty makes small business owners vulnerable and leaves them with few options to support their businesses.

High interest rates, for example, make it hard for these SMB owners to access affordable financing, whether that be for growth or to maintain day-to-day operations. To cope with these tough times, small businesses need to find ways to stay resilient. Diversifying their revenue streams by offering new products or exploring new markets can increase economic stability instead of relying on one source of income. Investing in technology can also help SMBs by cutting costs and improving customer engagement and experience. For instance, tapping into the digital world and setting up online stores can help physical shops reach more customers and adapt to changing buyer habits.

In addition to today’s rocky economic climate, the political climate is also impacting small businesses nationwide. FundKite's insights also revealed that 63 percent of small business owners are very concerned about how the upcoming election will impact their business strategy.

As Election Day approaches, small business retailers are paying closer and closer attention to what each outcome could mean for them and their business. Of the SMB retailers surveyed, cutting interest rates (61 percent), expanding financing for small businesses (58 percent), and tax reform (58 percent) are top-of-mind for the next administration to address. As they await the election results, SMBs know that either party’s victory could lead to changes in economic policies, regulations, and support programs that are crucial for SMBs.

However, the election impacts more than just policies; it also affects consumer confidence. Political stability can boost consumer spending, which is good for retailers. On the other hand, political uncertainty can increase worries for both retailers and consumers, possibly leading to less spending and further economic challenges.

No matter which party is elected, or what the economic experts report, there is still a major issue at hand — a disconnect between small businesses and economic experts. As America is built on small businesses, politicians and economic pundits must recognize this difference and make an effort to ensure that SMBs have the tools and resources they need to succeed.

Alex Shvarts is the CEO of FundKite, a leading Florida/New York-based fintech company.