Record Surge in Small Business Delinquencies
Alignable reports Record Surge In Rent Delinquency: Up 7% In October, Totaling 37% For U.S. SMBs
Due to ongoing economic challenges, small business owners’ ability to pay their full rent on time in October took a major hit based on a new Alignable poll. In fact, the U.S. rent delinquency rate among small businesses jumped 7% in just one month, marking the largest, most rapid increase in 2022.
In September, rent delinquency was at a six-month low, as optimism for Q4’s earning potential was high and some small business owners reported increased sales.
But now, a month later, 37% of small business owners in the U.S. were unable to pay their rent in full and on time in October, compared to just 30% in September.
Poll Results
- Higher rents for 51% of SMBs
- Cumulative, negative impact of more than a year of high inflation, which has absorbed most sales gains
- Recessionary fears
- Steeper-than-usual gas prices (rising yet again)
- Ongoing increases in supply chain costs
- Rising labor expenses and shortages
- Slowdown in consumer spending.
The overall delinquency rate jumped to 37 percent in October from 30 percent in September and from 26 percent in December of 2021.
Manufacturers are doing OK, only up one percentage point since December of 2021.
Artists/Musicians are up from 10 percent in December of 2021 to 37 percent in October of 2022.
This is an interesting set of numbers, especially education. Have parents stopped sending their kids to daycare?
The only relevant article I could find is from February 24, 2022.
PEW reports Working Parents Face Continued Chaos Despite Reopened Schools
Federal data analyzed by Stateline shows that parents of small children have left the workforce in much higher numbers than other working adults during the pandemic.
In the last quarter of 2021, 6% fewer jobs were held by parents of children ages 5-12, both mothers and fathers, compared with the same period in 2019, while other prime-age workers were only 1% short of pre-pandemic job levels, according to a Stateline analysis of census numbers provided by ipums.org at the Institute for Social Research and Data Innovation at the University of Minnesota.
Parents, especially mothers, have lagged in returning to work, partly because of periodic school closures due to COVID-19 outbreaks.
“At the beginning of the pandemic, at least everybody was on the same page and realized we were all in this terrible thing together. Now it feels like parents are alone in this. We’re forgotten,” said William Scarborough, a University of North Texas assistant professor who has a 3-year-old son in a pre-K program that’s often canceled. Children under 5 years old cannot yet be vaccinated, making them more vulnerable to COVID-19.
Is it still a Covid issue or did that morph into a cost issue?
Also note the surge in gyms and beauty salons.
Not to worry, citing jobs, president Biden says the economy is strong.
Lost in the Strong Jobs Meme, Full Time Employment is Down 572,000 Since May
I suggest, Lost in the Strong Jobs Meme, Full Time Employment is Down 572,000 Since May
Others suggest that the decline in full time employment is noise.
So, I did a follow-up.
Please consider Is Full Time Employment a Trend or Noise? Let’s Compare Today to the Great Recession
My conclusion remains the same. The decline isn’t noise. It mirrors what happened in 2007.
People are struggling with inflation and a falloff in business activity. There’s no doubt about that.
See the above link for discussion.
This post originated at MishTalk.Com
Please Subscribe!
Like these reports? I hope so, and if you do, please Subscribe to MishTalk Email Alerts.
Subscribers get an email alert of each post as they happen. Read the ones you like and you can unsubscribe at any time.
If you have subscribed and do not get email alerts, please check your spam folder.
Mish
this month, too, jumping 8% from September, landing at a rate of 46%.
Reduced consumer spending activity and higher than usual gas prices
continue to plague drivers for Lyft, Uber, taxi companies, and the like.”
Inflation Nowcasting (clevelandfed.org)
October 2022 — 8.09% y-o-y CPI
2022:Q4 — 7.20% CPI
Stagflation, business stagnation accompanied by inflation.
world’s leading guru on bank reserves) wrote me:
“Spencer, this is an
interesting idea. Since no one in the Fed tracks reserves…”
And Anderson reconstructed the
St. Louis figures’ required reserves to conform to the DIDMCA (obfuscating what
really happened under Paul Volcker).
There is no such thing as the “wage-price spiral”;
the “price-wage spiral”; or the “cost-push spiral”, in the
sense that increases in wages, prices, or costs are causes of inflation. Unless
effective demands (money times its velocity) are adequate to prevent a cutback
in sales, or a diversion of purchasing power to the price raisers, any
administered increase in prices will result in less sales, smaller outputs,
less employment, lower payrolls and less demand for products—in other words,
depression and deflation in due course.
Similarity if a strong union is able to force wage rates up
this will not have inflationary effects. In fact, quite the opposite will happen
unless the increase in wage rates is accompanied by increased productivity.
Given such an increase in productivity there would be no increase in costs or
necessary price increases. Thus, it is to avoid the deflationary impact which would
otherwise ensue from an increase in prices generated by an increase in labor
costs.
“Gebrael discovered a subreddit dedicated to connecting freelancers with employers willing to pay in bitcoin. The architect’s first job was to film a short commercial for a company that sold tires. Gebrael was paid $5 in bitcoin. Despite the tiny amount, he was hooked.”