From the cover
Businesses adapt amid economic pressures
What’s happening?
Year-over-year percent change in Consumer Price Index, Houston, The Woodlands, Sugar Land
Patrick Jankowski, chief economist with the Greater Houston Partnership, said he has noticed a national trend of small businesses closing in the restaurant and retail sectors during the last six to 12 months. He said he believes the phenomenon hasn’t been reflected in data yet, since it lags behind, but it can be attributed to higher interest rates and a slowing economy. “When [the economy is] going gangbusters, it’s a lot easier for small businesses to make a profit and to expand,” Jankowski said. “Small businesses are facing that difficulty right now: the general slowing of the economy.” A tight labor market has also proven challenging for small businesses, since they cannot compete with pay that larger companies offer, Jankowski said. Twenty-four percent of surveyed business owners nationwide reported “labor quality” as their biggest business problem as of November, according to a Dec. 12 news release from the National Federation of Independent Business Texas. Twenty-two percent of business owners cited inflation as the biggest challenge. “[Labor quality and costs], the worry of inflation [and] recession and...interest rates,” said Bruce Hillegeist, president of the Greater Tomball Area Chamber of Commerce. “That’s what really sets the tone for how a business might plan its upcoming months and whatnot.” Although Miya’s Munchies co-owners Sumiyyah and Khaliq Harvey had built a client base four years prior to opening the brick-and-mortar with farmers markets in the area, Sumiyyah Harvey said their expectations for the business’s success were not met. Along with the challenges of rising interest rates, she said small businesses struggle to hire employees due to the competitive wages large corporations offer their employees.
The consumer price index fell to 1.7% in June 2023—the lowest percentage since February 2021— before rising again to 3% in October.
The consumer price index measures the change in prices for goods and services.
-2% 0% 2% 4% 6% 8% 10% 12%
+8.5%
+7.6%
+4.5%
+4%
+6.1%
The consumer price index peaked at 10.2% in June 2022.
+3%
Oct. 2020 -0.1%
April 2021
Oct. 2021
April 2022
Oct. 2022
April 2023
Oct. 2023
The U.S. Chamber of Commerce’s Small Business Index is released quarterly and is compiled from 750 unique interviews with small businesses owners and operators. The following percentages show responses from the fourth quarter of 2023. National business outlook
of small businesses cited inflation as one of their biggest challenges
cited revenue as a top concern
22%
53%
agreed there is a worker shortage in their local area
said the U.S. economy is in good health
53%
25%
SOURCES: U.S. BUREAU OF LABOR STATISTICS, U.S. CHAMBER OF COMMERCE/COMMUNITY IMPACT
In their own words
"The high interest rates have also made it very challenging to seek outside business financial help to be able to expand and grow our small business and hopefully one day create more job opportunities." ADAN MUNOZ, OWNER OF SUPERBURGERS OF MAGNOLIA
“The cost of the goods that I’m buying is going up. The shipping cost of what I buy is going up. So I’m obviously having to raise my prices just to make money, and it’s unfortunate because a lot of people can’t afford anything extra.” AMBER LATU, OWNER OF JOURNEY JUSTEEN’S BOUTIQUE
“Some businesses [that] were able to thrive during the boom times of the last two, three years are going to have to make adjustments, and those that can make the adjustments will survive. Those that can’t will go by the wayside.” PATRICK JANKOWSKI, CHIEF ECONOMIST WITH THE GREATER HOUSTON PARTNERSHIP
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