Recent reports on U.S. small businesses have found an increase in spending, in part due to inflation and a steadying of confidence for April.
Bank of America, which tracks three million small businesses, found that overall credit spending was up 16% year over year. Broken down, credit card spending grew by 20%, which is eight points over debit card spending (12%). Travel spending was also up by 57% as the U.S. and the world enters a "post-pandemic" era.
The multinational bank also found that payment "across all types" was up 14% per client. That bump can be summed up as both spending growth and inflation's impact on total expenses. Bank of America specifically identified gas as a large area of spending for small business owners. However, even with inflation and a recession on the horizon, small businesses could ride out this dip.
"While the pandemic represented a substantial period of economic disruption to Small Businesses, they have bounced back convincingly and seem relatively well-placed to deal with a slowdown in the economy," said David Tinsley, senior economist at Bank of America.
Still, Bank of America's 2022 Small Business Owner Report released last week found that 88% of small business owners in March said inflation impacted their business. Seventy-six percent said the same thing about supply chain issues.
Both of these concerns have led many owners to raise prices or reevaluate their cash flow and spending. Some have also faced product and supply delays along with delivery delays as well as a loss in sales.
Business confidence has steadied for April. However, Sharon Miller, head of Small Business at Bank of America, said that entrepreneurs remain concerned.
"Entrepreneurs are wary of the short- and long-term impact of multiple economic forces. Confidence in the national and local economy dropped year-over-year, and rising inflation and supply chain disruptions continue to generate headwinds for business owners and drive operational changes," Miller said.
FILE PHOTO - U.S. President Joe Biden meets with small business owners to discuss the small businesses boom in the South Court Auditorium at the White House Complex in Washington, U.S., April 28, 2022. Photo: Reuters / EVELYN HOCKSTEIN
