Despite the growth of the domestic product, the income of small business will decrease
Brian Westbury, chief economist at FirstTrust Advisors, responded to Fed Chair Jerome Powell by saying he would not resign if President-elect Trump asked him about ‘making money’.
The backbone of the US economy – America’s small business – could be broken beyond repair without serious intervention, according to a new study by private digital lender Biz2Credit.
The study’s data was taken from more than 100,000 financing applications submitted to Biz2Credit between January 2022 and December 2024, and shows a significant drop in small business income at the end of 2024, the lender said, continuing into 2025.
The survey points to concerns about the economy after four years of Bidenomics, or President Biden’s policies that include taxes and regulations on the business community and tax incentives for certain targeted industries that align with his progressive agenda. Despite strong headlines from GDP growth and low unemployment, problems such as inflation and regulatory costs have hit certain parts of the economy more than others.
Inflation rose 2.9 percent in December, in line with expectations
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“Small business owners went on a roller coaster ride in 2024. Earnings rose till July and fell every month till December,” said Rohit Arora, CEO and co-founder, Biz2Credit. The median monthly income was down $68,000 from 2023 and was also lower than it was in 2022.
According to Arora, the decline in prices is because small businesses do not have the scale to spread costs over large accounts and are more vulnerable to inflation, which in turn has led to higher prices for goods during the downturn. T.
The incoming Trump administration has promised to ease regulations and taxes on small businesses to regain lost growth during the Biden years.
“Trump was elected based on his promise to fix the economy and he made it a priority from Day 1,” Arora said. “Based on our data in the later months of 2024, the start of 2025 could be rocky for small businesses.”
Small business optimism drives Trump win to six-year high
President Donald Trump shakes hands with Vice President Mike Pence and First Lady Melania Trump as they look on after speaking in the East Room of the White House, early Wednesday, Nov. 4, 2020, in Washington. (AP Photo/Evan Vucci)
According to the study, Small businesses are seeing a 43 percent drop in profits in the first 11 months of 2024, with average monthly revenue rising to $86,809 in 2023, compared to $150,000 in 2023 – the worst annual average since 2020. Business-related expenses increased dramatically, with average monthly expenses coming in at $664,525 compared to $364,292 a year ago.
Although inflation has risen to an impressive 9.1% since June 2022 (Wednesday’s CPI report showed inflation rose slightly from last month to 2.9%), overall costs for small businesses in rent, insurance and labor are higher, and some are rising.
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On a brighter note, the National Federation of Free Business (NFIB) published its new Small Business Optimism Index on Tuesday, showing optimism on Main Street jumped 3.4 points to 105.1 in December. It marked the highest reading since October 2018, with small business owners hoping for improved economic conditions under Trump.
