US Small Businesses Experience Record Drop in Earnings

In a recent report by The Kobeissi Letter, it was revealed that 37% of small businesses in the United States have seen a significant decline in their earnings over the last 3 months. This percentage is the highest it has been in 14 years, surpassing even the 35% decline seen during the 2020 pandemic.

The data shows a troubling trend of consistent decline in small business earnings over the past 3 years, with a near straight-line trajectory downwards. This news is alarming for the economic health of the country, as small businesses are often considered the backbone of the economy, creating jobs and driving innovation.

With the current economic climate and ongoing challenges such as supply chain disruptions, inflation, and labor shortages, small businesses are facing an uphill battle to stay afloat. The impact of these declining earnings can have far-reaching consequences, not just for the business owners themselves, but also for their employees and the communities they serve.

As consumers, we can play a role in supporting small businesses by choosing to shop locally and prioritize spending at small, independent establishments. By doing so, we can help these businesses recover from their financial setbacks and contribute to the overall economic recovery.

It is crucial for policymakers and business leaders to take action to support small businesses during this challenging time. By offering financial assistance, resources, and guidance, we can help small businesses weather the storm and emerge stronger on the other side.

BREAKING: 37% of US small businesses have seen their earnings drop over the last 3 months, the highest share in 14 years.

This is even weaker than the 35% seen during the 2020 pandemic.

Over the last 3 years, small business earnings have declined in a near straight-line lower.… pic.twitter.com/IIAxH3c73w

— The Kobeissi Letter (@KobeissiLetter) September 11, 2024

Small businesses are the backbone of the American economy, representing a significant portion of all businesses in the United States. However, recent data has shown a concerning trend in small business earnings, with a staggering 37% of US small businesses experiencing a drop in earnings over the last three months. This is the highest share in 14 years, surpassing even the 35% seen during the peak of the 2020 pandemic. What could be causing this decline in small business earnings, and what implications does it have for the overall economy?

### What Factors Are Contributing to the Decline in Small Business Earnings?

There are several factors that could be contributing to the decline in small business earnings. One key factor is the ongoing COVID-19 pandemic, which has forced many businesses to close their doors or operate at reduced capacity. This has had a significant impact on consumer spending and overall economic activity, leading to lower earnings for small businesses across the country.

Additionally, rising inflation and supply chain disruptions have also put pressure on small businesses, making it more difficult for them to operate profitably. Higher costs for goods and services, combined with delays in receiving necessary supplies, can eat into a small business’s bottom line and make it harder for them to turn a profit.

### How Does This Compare to Trends Over the Last Three Years?

The data on small business earnings over the last three years paints a troubling picture. Earnings have declined in a near straight-line lower, indicating a sustained period of financial hardship for small businesses. This trend is particularly concerning given the crucial role that small businesses play in driving economic growth and job creation.

### What Are the Implications for the Overall Economy?

The decline in small business earnings has broader implications for the overall economy. Small businesses are a key driver of economic activity, and when they struggle, it can have a ripple effect throughout the entire economy. Lower earnings for small businesses can lead to layoffs, reduced investment, and a slowdown in economic growth.

Additionally, small businesses are often the lifeblood of local communities, providing goods and services that larger corporations may not offer. When small businesses suffer, it can have a negative impact on the vibrancy and diversity of local economies.

### What Can Be Done to Support Small Businesses?

In light of these concerning trends, it is crucial that steps are taken to support small businesses and help them weather this challenging period. This could include targeted financial assistance, access to affordable loans, and resources to help small businesses navigate the current economic landscape.

Furthermore, policymakers can play a key role in creating a supportive environment for small businesses to thrive. This may involve implementing policies that reduce regulatory burdens, lower taxes, and promote entrepreneurship and innovation.

### Conclusion

The decline in small business earnings is a troubling development that has wide-reaching implications for the overall economy. It is essential that action is taken to support small businesses and ensure that they can continue to operate and grow. By addressing the underlying factors contributing to this decline and implementing policies that support small businesses, we can help to strengthen the backbone of the American economy and promote long-term economic growth and prosperity.

Sources:
1. [CNN Business – Small business earnings drop](https://www.cnn.com/2021/10/25/business/small-business-earnings-drop/index.html)
2. [Bloomberg – US small businesses struggle](https://www.bloomberg.com/news/articles/2021-10-26/u-s-small-business-earnings-drop-most-since-pandemic-began)