Mardeni’s president of the research, Ed Yardeni, analyzes new economic data in the middle of market weakness to earn money.
A new analysis of the Bank of America Institute reveals that small businesses seem to take a financial moment, although the changes of policy linked to the prices can stimulate inflation and with it a new challenge to profitability.
The Bank of America Institute’s report analyzed data from the bank’s small businesses and found that in the period from six months of August to January, the growth of deposits among small businesses exceeded the growth of total payments for the first time in three years.
“The positive is that income is increasing and we find that for the first time in the last three years when deposits have exceeded payments, so it’s really a good time entering 2025 and the optimism of small businesses is up “Said the economist of the American bank Taylor Bowley told Fox Business. “But that does not mean that there is not yet a risk of pressure on costs to limit the enthusiasm and growth of small businesses in the future.”
Although inflation has slowed down considerably since its 40 years in 2022, it remains high and its impact on wages has contributed to continuous growth in small businesses.
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A new analysis of the Bank of America Institute revealed that small businesses entered 2025 with a positive financial dynamic. (Reuters / Brian Snyder / Photo File / Reuters Photos)
“Income seems to increase, which is a very good thing because small businesses operate historically on fairly small beneficiary margins,” said Bowley. “But the only thing is that the costs do not necessarily seem to be down.”
Bowley has said that payroll is one of the most important categories of spending for small businesses and that wage inflation with regard to pay has been a key factor in the cost increased by these companies, although The expansion of the workforce can also be a factor.
“Wage inflation is not the only engine in terms of what we see with the growth of the pay. This is an indication that small businesses are always able to keep people on pay, and potentially expand their workforce, “she said.
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Data from the Bank of America Institute showed that despite continuous cost increases, faster income growth has enabled the entry / flow of small businesses – which the company considers an indirect indicator of the Profitability of small businesses – to be increased by 1.5% from one year to January. This metric was negative last spring and exceeded only 1% in the fall.
Bowley said that with several of the Trump administration’s pricing plans always evolving while being implemented, the bank data does not currently reflect what these impacts will be.
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| Teleprinter | Security | Last | Change | Change % |
|---|---|---|---|---|
| Bin | Bank of America Corp. | 43.97 | -0.52 |
-1.16% |
She said that uncertainty about prices makes it difficult to see the realization of small businesses in terms of transmission of these increased costs to consumers in the form of higher prices.
“Small businesses are not the same as a large company, which could have a little more latitude in terms of determination on the part of this price increase they would transmit to the consumer, while small businesses operate on fairly small beneficiary margins, “Bowley says.
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Bowley noted that the analysis of the World Research Team of Bank of America currently considers trade, changes in fiscal policy and immigration as being slightly inflationary – although this impact is variable between the different sectors of the economy, prices, public spending reforms or immigration application policies are implemented.
