The withering attack on small business

The incessant attack on small business and, by extension on the middle class, continues unabated. Ever since the first lock-downs and medical restrictions in 2020 which devastated small business owners but greatly benefited Walmart and Home Depot, there has been a series of developments such as raging inflation that have made the situation far worse. Even the inflation was (is) an attack; The Fed non-stop money printing only benefits a wafer thin minority of ultra-wealthy influencers who were never elected yet seem to control a monetary policy which is killing small businesses and creating financial hardship for Americans.

In 2022, I wrote several posts about this issue and (correctly) predicted the condition called "Stagflation" which is where prices rise in general (inflation) however incomes stagnate. This is where we are now; Stagflation. To be fair, I learned about these things by reading work that other, more educated analysts have written.

"According to Moody’s chief economist Mark Zandi, on average Americans are now spending “$709 more per month on everyday goods and services than they did two years ago”…"

The (big) problem for small businesses who rely on consumer spending is that incomes haven't increased so that $709 extra dollars diminishes spending elsewhere. To make up for the shortfall, businesses will need to raise prices feeding the vicious cycle of stagnating incomes and higher cost of living expenses.

"Is the rising cost of living causing financial stress for you? If it is, you are definitely not alone.The wealthy are doing just fine for the moment, but inflation has caused a lot of pain for the vast majority of the rest of us. Just paying for a place to live has become incredibly oppressive.  Personally, I was astounded to learn that the average rent in Manhattan has now reached $5,588 per month…"

So far, everyone I speak with has the impression that this is just a "soft spot" in the economic cycle and soon we'll revert to the way things were before which is understandable considering the blithering lies that come from TV commentators. Mark Twain once said: "Anyone who doesn't read the news is uninformed, those who do read the news are misinformed".

"Who can afford that?
Only the wealthy. Of course the truth is that rents have been soaring all over the country. It is being reported that the nationwide average rent-to-income ratio has exceeded 30 percent for the past two years. This is the very first time in the entire history of our country that this has ever happened."

I don't understand why the current administration would want to have their name associated with this economy - "Bidenomics" - is a large neon sign representing the complete collapse of our functioning marketplace. Absolutely every metric is worse by far than just two years ago.

Spin this: The headline general business conditions index fell twenty points to -19.0 (well below the -1.1 expected)

As a private lender I watch these factors carefully because they increase the risk of defaults. The added risk also raises costs however, I haven't seen any rate increases in the private lending space in several years. What IS happening however is amounts approved have dropped and lengh of term has shortened.

Industries that are suffering due to the economic condition such as reatil and trucking are being declined more than before also.

Having said that, there is a lot of activity and requests are many. I'm doing the best I can to approve as many requests as possible.

Here are some other resources I've been following:

In other words, not only are surging commodities about to blow away hopes for moderation in headline CPI, but economists are once again dead wrong, and instead of looking at the moderation in YoY rents - which they correctly see as indicative of a slowdown in the CPI basket-heavy OER index - what they should be looking at is the real-time actual rental index, which has been rising for 6 months now and is about to take out all time highs at a time when the Fed is supposedly pausing its rate hikes and if anything, is already planning its next easing cycle.

"A recent Redfin analysis revealed that 92% of homeowners with mortgages have rates significantly lower than the current weekly 30-year fixed mortgage rate of 7.16%. Specifically, 92% have rates under 6%, 82% are beneath 5%, 62% are under 4%, and 24% are below 3%. This has led to many homeowners feeling trapped by their mortgage rates nationwide."

See how much you qualify for

Start here
nick@mycapaccess.com
+1 727-863-1950