Inflation has made its way into big businesses and small businesses alike. Americans are feeling the strain of inflation as consumer confidence has hit its lowest level since July of 2022. Small businesses in particular have felt the pressure as, according to a survey from Slack Technologies, almost 40% of small business owners believe 2024 will be a “make or break” year for their business.

Yahoo Finance Reporters Jared Blikre and Brooke DiPalma are joined by JPMorgan Chase Northeast Business Banking Divisional Director Robert Rodriguez for the latest edition of Stocks in Translation to discuss the pulse of small businesses in America and take a deep dive on the impact of inflation on Americans.

For more expert insight and the latest market action, click here

This post was written by Nicholas Jacobino

Video Transcript

Welcome to stocks in translation, our essential conversation cutting through the market, mayhem, the noisy numbers and hyperbole to give you the information you need for your portfolio.

Now, I'm Jared Blicker and today I'm joined by Robert Rodriguez.

He is the head of Banking for the Northeast region.

Chase for Business as well as Brooke Dipalma, our Intrepid uh food editor on loan from Q one earnings.

So thank you for taking some time and joining us here today on the docket, we are talking about the small, the pulse of small business in America.

How are small business owners seeing the current economic environment in this year, which is an election year.

Our word of the day is adaptability, a key trade of an entrepreneur and what it means to survive and thrive in today's America.

And this episode is brought to you by the number 3539.

That is a percentage of small business owners in the US who are still suffering from inflation.

We're going to take a deep dive into exactly why that is now first, it's small business week here at Yahoo Finance and we're taking the polls today.

So let's just cut through the noise and begin, what is the state of the small business uh zeitgeist in America right now?

Yeah, thanks Sharon.

So, so first of all, I would say the state of the business is, is pretty solid based on what we're seeing.

You know, obviously, you know, from a small business community perspective, they are absolutely aware of inflation.

As you talked about, you know, we at JP Morgan, we, we take the time to pull 500 small business clients on a monthly basis and we track those sentiments, you know, we consider ourselves a trusted advisor to the small business community.

You know, we serve over 6 million of them.

So what we're seeing right now in April results, absolutely.

They are, you know, concerned at a macro level, as you mentioned, inflation being one recession, you know, looming, you know, but what I would tell you is that 67% of small businesses are feeling that their business is thriving so locally, you know, there's a lot of optimism, uh you know, and they're just finding ways to adapt and, and that's why that word of the day, adaptability is uh fantastic on point.

I love it.

Yeah, we're gonna get to that in a second.

You mentioned this survey, just any other points you'd like to uh hit in there.

Some maybe something surprising.

Yeah, I wouldn't say anything surprising.

Um per se, you know, what I would tell you is that you know, from a macro level that we're looking at inflation being concerned, we're looking at cash flow concerns, you know, staffing still is kind of lingering out there.

You know, there's obviously, you know, a lot of jobs out there in the marketplace, but it's really holding on to that staff, you know, from a small business perspective.

That's, that's concerning, you know, I'd like to explore that we talk about labor from big picture uh perspectives.

You know, we get the monthly stats from the BLS.

But uh what is it like for small businesses out there where there was a huge disruption over the pandemic, staffing became a nightmare for a lot of small business owners that I talked to here in New York.

How have businesses recovered from that?

Yeah, the, the recovery has been, you know, a slow build.

But I would tell you right now it's, it's more about the quality of, of the folks that they're staffing up, you know, and then like, as I mentioned earlier, retaining that, that, that staffing is, is critical.

Um you know, at the end of the day from a small business perspective and, and we obviously take it super seriously at chase.

Um You know, it's, it's all about, you know, making sure that they're, they're staffed up, they're able to, you know, produce on a, on a, on a consistent level.

Um and that we're there to support them every step of the way.

Yeah, and labor inflation has been something that we've been talking about.

Not only from larger companies, but it also is impacting small businesses as well.

How exactly are they able to overcome high labor costs these days?

And what are they doing to offset that?

Yeah, it's tricky, you know, it, it really is.

You know, you talk about the cost for labor is absolutely higher.

Um, you know what we're finding in for small business owners is they're, they're, they're resilient bunch as well, you know, so it's really finding ways to reduce expenses, you know, because just the cost of doing business is so high, not just from a labor perspective, just cost of goods and services, you know, keeping inventory at high levels, you know, is so critical.

So, you know, at the end of the day, they're trying to be more, you know, you know, looking for ways to reduce costs where they can and not necessarily always pass that end cost on to the consumer.

They have to raise prices where, where it's appropriate.

We all feeling it ourselves, you know, in that uh that, that bag of groceries is much higher today thinking twice before I had the ice cream gallon.

Right.

I hear that.

So, so yeah, they just being smarter in how they operate is, is really the, the key there.

What about supply chain problems?

I don't hear that every single day in the news.

Like we used to a couple of years ago.

But, uh, and I guess it depends on what kind of business you have.

Is it, uh, manufacturing based small business, is it service oriented?

Most small businesses are probably service oriented.

But what are the, the supply chain problems that are still facing, uh, some of these business owners?

Yeah.

So it's still delays in, in shipping from overseas.

You know, we're seeing that and then getting that the, the those goods and materials, you know, through the process to the end consumer, you know, I, I can tell you just locally, you know, from, from my, I have a 15 year old son, you know, and you know, he, he wanted a, a hoodie from, from some company.

So I said, ok, probably limit time job special taken anywhere else.

Yeah, we may have ordered the same hoodie.

Uh and just, you know, the, the ease of purchasing the hoodie.

Super simple.

Click here, click there.

But to get the actual product it's taken now like three weeks and every day he's, you know, ha hassling me.

Where is it?

Where is it finally arrived yesterday?

You got to wear it today.

So, you know, it's like examples like that, like you, you multiply that out across the country, you can understand where, you know, as a consumer, I might be frustrated with that small business.

But I understand that like, you know, at the end of the day, they're working through the same constraints that I'm seeing on the, you know, day to day running, you know, business banking here in the northeast for chase.

Yeah.

So we've ticked through a couple of things, a couple of uh different concerns here with the labor.

Uh we're gonna do a deep dive on inflation and the fed.

Um What about, um what about cash flow?

That was another thing you mentioned.

I guess that relates to a lot of the other topics.

But how are companies keeping the amount of cash they need on hand?

Because it's all about making payroll and uh your vendors too, they gotta get paid.

They absolutely have to get paid.

You know, look, I think the cost of capital is high right now, right?

So working capital rates, you know, continue to be on the rise.

We, you know, we don't see them necessarily coming down anytime soon.

So we're preparing our clients for that, but the, the, the uh the want to borrow and have access to capital is still at a high demand.

And so we're at chase, we're trying to find ways to help clients gain access to capital.

If you're a business, you're starting out, right?

We have our inc program if you're looking for working capital, working with your business relationship manager, local banker, you know, to have a line of credit.

Um We're trying to find ways to make that process super simple and, and easy, you know, more digitized.

So access a lot quicker, right, money in their hands that said back to, you know, just looking at ways to improve their cash flow, as I mentioned earlier, you know, reducing expenses, you know, finding ways to, to, um, you know, pile up that cash to your point to make sure that vendors are getting paid and make sure that they're keeping the staff that they have on hand and happy, you know, because that's really important.

I got an, I got another important point here.

This the name of the show is stocks.

In translation.

We're talking about small businesses.

So maybe some of them have this prof uh this path to become a, become a public company, but maybe they don't, I'm just wondering, you know, you're talking about access to capital, that's kind of one of the primary mechanisms or benefits of the capital markets.

You list a company, you get a bunch of money uh deployed the way you want.

But do you have conversations with some of your business owners that want to get into that league?

Yeah, absolutely.

Yeah, we, we take clients from like again, idea open that bank account at their local branch all the way through the process, working with our business relationship managers, we partner with our commercial bank as well, right?

So what we consider uh the commercial space is 20 million and up in revenue.

Um and then we have clients that matriculate through that all the way up to the IB to go public.

So, you know, at Chase, we're able to take clients on a complete career journey, you know, and, and and business journey from idea all the way to go in public.

So, you know, as as clients progress, you know, we wanna make sure we introduce them to the right partners within the financial institution.

Rather that's commercial bank or whether that's our private bank, you know, and that's why having a trusted advisor, uh you know, around your table as a business owner is so important, right?

We we talk a lot about business owners having that account and having that attorney, it's really critical that they also consider a banker at their table to be a trusted advisor, not to just be someone to contact when you know, they need money, when you need money.

Right?

A little bit late.

You, you wanna be, be able to plan ahead of that.

Exactly.

Yeah, I'm curious, has there been an influx of people who are interested in starting small businesses in recent years given just the change of the working environment and the labor environment overall?

And then in addition to that, you know, it's a common saying that small businesses are an engine of growth.

But when you think about how exactly that contributes to this country and contributes to the robust economy at large, how does that compare then to larger corporations as well contributing overall?

Yeah.

No great, great questions.

I mean, so one right out of the endemic, we saw business formation increase dramatically.

You know, it's start, it's still at a high level, but I'd say it's starting to plateau somewhat.

That said, you know, when you think about, uh, the, the US economy as a whole, I mean, 99% of all businesses are what we consider small.

Right.

So you talk about large Corporates, it's, it's not a huge percentage, right.

That said 99% are, are small business and, and 33 million, you know, small businesses across the country, right?

They employ a large portion.

Absolutely.

Yes.

60 plus million Americans are employed by private sector businesses, you know, and that's quite literally fueling the, the economy at large.

So, you know, when we talk about small business, you know, fueling the the economy, it's quite literal.

Um And so we take that super seriously, you know, um you know, from a, from a bank perspective and, and that's why we invest so heavily in, in the small business community and make sure that they have accessibility at every level in every life stage.

I want to get to our word of the day here.

Adaptability seems pretty straightforward.

But I wanted, I wanna get your opinion.

What does it adaptability mean for a small business owner in America today?

It means literally the word adapt right?

When I personally, I, I see it, you know, each and every day when I get to go out and visit small business clients.

But even in my local community, j when I, when I look at, you know, the, the stores that I visit, you know, we had a diner, you know, that we frequented constantly every Sunday.

That's where my family, you know, went, unfortunately, they closed, you know, and it, it was, it was super sad on our, our community and it was a, it was a tough blow.

But what did, what did the local businesses do?

The local Mexican restaurant literally adapted and say, hey, we're gonna add breakfast to the menu, took a couple of the employees from the diner and now they're flourishing, you know, in a, in a space that they normally weren't, you know, taking, taking advantage of.

And they did that not necessarily from a monetary game perspective.

Obviously, it helps, but it adds some cost to, to the bottom line.

But what were they doing?

They were helping the community.

And so that's like just a great example locally, you know, and, and we all can probably see that, you know, as you look at um vacant storefronts, right?

Vacant storefronts used to stay vacant for a long time.

Right now, there's signs are going up, you know, businesses are popping up.

So, so, so folks at a at a high level, you know, obviously big words like recession and, and inflation are are concerning.

But like when you look at boots on the ground you know, the small business owners are a resilient bunch, as I mentioned earlier and, you know, they know what they can control, you know, and, and, and I think the communities want to support small business.

You know, you just see that renewed sense.

So for us it's, it's, uh, you know, I, I love that.

67% are telling us, hey, we're thriving.

So that, that's something that we should all feel really good about a little surprising.

And Brooke, I think we got a food story for you.

The, the, the breakfast menu comes to small businesses, the small diner we've covered.

This has been booming lately.

We, we've seen so many evil double down on a competition, whether it be mcdonald's Starbucks struggling a bit right now.

But obviously, there's so many Burger King, really doubling down and so on and so forth, you know, and I think really, really, I appreciate what you said to small businesses adapting there, this concept of adaptability, thinking so quick on your feet.

And I just spoke to Hane Celestial Ceo not too long ago and she said that she really doesn't think like an entrepreneur.

She wants to be quick and move quick and to hear that small businesses are doing that too is very uh telling as well and technology plays into that too, right?

I mean, just, just what we have available to us, you know, and, and I think small business owners, you know, certain generations, you know, have kind of pushed that out.

And I think COVID and, and, and the pandemic changed that whole landscape, right?

We have to adapt and, and so, yeah, and so here we are a few years later and, and things are starting to go in the right direction.

I'm gonna ask you to hold that thought there.

Thank you.

And uh we're gonna have to adapt to a commercial break here for some of our viewers.

So for our viewers on the streaming platforms, we're gonna take a quick break and for everybody else, wait two seconds and we're back.

All right, we were just talking about adaptability and small businesses, but now it's time to talk about numbers and this show is brought to you viewers about by the number 39 and that is a percentage of respondents to this chase small business survey that we've been discussing who are suffering from inflation.

And I bring this up now because we've talked about inflation and labor and all these things.

But I wanna talk about the Fed.

I wanna talk about policy makers and I wanna talk about some of the macro statistics that we watch here.

You know, all politics is local, all businesses is local, but we gotta talk about Fed here and we've seen recession risk really evaporate.

They started out high at the beginning of 2023.

That was last year.

They've come down and now we're talking about business opti optimism.

But what are your conversations look like with, um, some of the small businesses?

Do you actually talk about Jay Powell and what he might do?

You know?

It, it, it's definitely top of mind.

Um, you know, I'd say at a high level with, with some clients, depending, depending on, on who that client is.

I'd say more, more broadly, like, it's not coming up a whole lot.

You know, I, I, I'd say when I go out on, on visits, you know, they definitely wanna hear my opinion, you know, I think from the banker's perspective, it's like, hey, like, like back to, as we talked about, you know, at, for the business owner, like, you know, locally they, they know what they can control.

And so, so I would tell you that it's not necessarily, uh a consistently hot topic, you know, um, you know, from a, a banker to, to, to small business owner perspective, but it's, it, it is a concern.

I mean, at the end of the day, we wanna see rates, you know, the small business owner wants to see rates come down, you know, I think everyone was expecting it, you know, multiple times this year now.

It's looking like we're not sure.

And as I mentioned earlier, you know, for us, we're, we're saying, hey, look, let's just prepare for what, what, what things are looking like right now and make sure you're set up for success as the balance of the year progresses and we head into next year to be fair.

I don't think Jay Paul would want to be involved in all these small business conversations.

Otherwise something had gone horribly wrong.

But I just wanted to ask you, what are some of the, the bigger statistics that your clients are, are concerned about or looking at?

What kind of data are they looking at?

Yeah.

You know what I would say, small business clients are as much as they're, they're looking at kind of the, the bigger picture.

They, they're really focusing on their customer base, you know, and, and what I'd say to, to, to any small business owners is really understanding, you know, who your clients are, where are they located?

How are they spending their money, you know, where, where, where else do they like to, you know, um you know, obviously invest their, their time and energy, you know, and, and when I think about, you know, what we do at, at Chase for, for the small business community, you know, if they're processing their credit payment with us, this is pretty cool.

We have a new tool called customer insights where literally they have access, right?

So they're processing their credit payments.

So um they can look on their dashboard and literally a lot of that guess work is taken out of, of, of the small business owner having to do that research themselves and we provide that data to them.

So they're able to understand who their customer is, what their customer currently is experiencing and where they're at with their spending power 100%.

And, and also, you know, give, get ideas on how to, you know, provide discounts in certain areas, you know, where, where maybe it's lacking.

So, can I ask where you get your data from?

I mean, because all business would want to have access to the best data.

Um Is this something that you're compiling off, off of your own research, off your client or is this something you're aggregating from the national statistics here?

Where are you getting it?

Yeah, so, so as I mentioned earlier, we we, we do survey our, you know, 500 small business owners a consistent basis, right?

Um But I, I would tell you, you know, locally for us, um we do a ton of, of listening sessions at, at JP Morgan Chase with customers, you know, but we also do it with our banker force, right?

And getting feedback.

So understanding what our clients are telling us, what are the pain points, you know, for me, that's, that's what my job is all about is trying to eliminate roadblocks for my employees, my bankers, but ultimately for the client, you know, and, and when we put our clients first, you know, all good things happen.

Yeah, I do wanna weigh in quickly given that we seem to be hyper local when it comes to small businesses.

And what I've noticed in my community is that there's one pops up, ends up being mega successful.

Shout out to the hive at Hoboken.

If you've heard of it, they make these incredible cinnamon buns, you a line down the block, but now they're opening up another location.

Rent right now is still at a high what reports or local uh you know, data, data sets should they be following in order to understand what sort of opportunities they have in front of them in terms of expansion plans or really just to understand what is going on in their local towns.

Yeah, I mean, look, I think be being involved in your local community period, full stop is important, right?

So a lot of small business owners are hyper focused on obviously their business, you know, so understanding who's left and right of you, not just your your competition but also local politicians, you know, when, when I meet with business owners, you know, the the the the most successful ones are piped in to the community boards, you know, going to the, they're, they're going to the local meetings, they're part of the social media networks, right?

Every town has, you know, the, you know, the Hoboken Facebook group, right?

And you wanna be able to be on that and see what's happening, right?

Doesn't mean you've got a comment on everything.

It doesn't mean you need to, you know, be completely involved in every post.

But understanding what your community is telling you is so critical for the small business community, especially those that, you know, not only wanna be successful in their community but have ideas of expansion.

And I'd say most business owners, you know, that's what the goal is.

Right?

Well, I wanna take time now to, uh, segue into another segment of our show that we take a page from the Hollywood playbook and we call it who wore it better.

And today is actually a rare three way tie between three states states in the United States of America, California, Florida and New York.

So, what is the question here?

Each of these states actually raise the minimum recently.

Uh, some of them took effect as recently as this year, California went from 1550 to $16 per hour.

Florida went from 12 to 13 with an eventual target of $15 per hour by 2026.

But it's 13 right now and New York it's as high as $16 in the city, $15 in some other places.

So my question is which state wore this increase in minimum wage better?

Brook.

Oh, boy.

Oh, well, I have to say I've been following the California Fast Act and given that I cover restaurants that's been heavily weighing on companies that large and more than 60 locations, which I believe would also be considered a small business as well.

Um, and so with that being said, I feel like California probably were at the worst if we could start there.

And I feel like here in New York people are just so used to adjusting to wage changes.

So I would say here in New York, it seems as though it has been status quo.

So if the company has passed along a higher price than me, I have noticed in a large perspective, but not really.

Thank you.

Thank you.

I couldn't agree more with that.

So, yeah, I'd say, you know, so first of all, my, my 18 year old daughter would appreciate the wage increase in New York because she's gonna be, uh, you know, a camp counselor this summer.

So I can't even imagine a accepted into Boston College.

Shout out Mary.

Uh, so, um, yeah, so, you know, I, I think, look at the end of the day, you know, uh, I think small business owners to your point, um, is, you know, they're adapting the consumer, adapting.

I, you couldn't, I couldn't have said it any better.

You know, I, at a, at a large, you know, when I look at my budget, it's definitely higher what I'm spending day to day, but you don't necessarily feel it as much.

Um, you know, and, um, you know, look, I think it, you know, it's, it's good to pay people more.

I think if we're getting good quality folks that, that are being employed, I think that's, that's a big if, but yeah, that's, that's the, if that's the if and uh small business owners need to again adapt.

All right.

Um, since I am a Florida man, I spent 35 years in Miami.

I'm just gonna go with my home state and leave the rest of it to you guys.

You guys, Florida did it best for Jar and we've got some time now.

I wanna get into your past.

Like you, you come from, you're, you're a local business person and you kind of rose through the ranks at JP Morgan Chase.

Just tell us about your journey.

Yeah.

So, uh so I've been at JP Morgan uh for, for 20 years, started as a, a banker supporting the Arthur Avenue section in, in the Bronx.

Yeah.

Yeah.

So uh happy to, to be a lifelong Bronx.

I, you know, born and raised and still reside in the Riverdale section of the Bronx.

Very curious for the rec recommendations when it comes to Arthur Avenue restaurants.

Well, we'll take that off air though.

I can, I can give you a full, full day at Arthur Avenue.

Um Yes.

So I started there supporting that small business community which uh and when I say community, it truly is a community and it really taught me a lot as a, as a young banker, you know what it meant to be, you know, customer facing and, and provide a great client experience, you, but also kind of break through the barriers of like that, as I mentioned earlier, not making, you know, have, be having a seat at the table of the.

Did you intend to punch through, did you wanna rise through the ranks or did it just kind of happen?

That was great question.

Yeah.

So I was, I absolutely had every intention of hopefully climbing uh the, the ladder so to speak, but I just didn't know what that looked like.

I didn't know what the timeline looked like.

I didn't know, you know, the first thing on how to get there, you know, growing up in the Bronx, I grew up with a single mom, you know, and, and, and raised, um, you know, local jobs, right.

So I worked for small businesses.

Um, so I always had a passion and I really wanted to ultimately start my own business and I just didn't have obviously the, the seed money coming out of school to do that.

So for me, helping business owners from a banking perspective was the next best thing and I really treated it.

Uh Jared like a small business myself.

So I looked at my client base, you know, being, you know, my customers and I had the power of JP Morgan behind me.

And so that really helped me, you know, progress and do well, uh because when a community, you know, sees value in you, they, they refer you more clients and right, and that's how it works.

And so I was able to kind of parlay that into a leadership role and then kind of just continue to, to climb up through the ranks that way.

And I've been very lucky and blessed to be able to do it here in New York and, and not have to, you know, move, move the family because that was something that, you know, moved to Connecticut.

That's right.

That's right.

Yeah, much kudos, I mean, a 20 year career at the same company is pretty incredible, so much kudos to that, you know, there is so much noise out there when it comes to who to watch and, and where to look who are some people or companies that you follow when it comes to having the best advice, especially particularly when it comes to your clientele of small businesses.

You know, I keep a close line on b of research.

I don't know if you, you folks are from small business research, they do small business research, right.

So we, we keep tabs with them, you know, I look, II I pay close attention to what our Ceo Jamie Dimond is saying.

He says a lot.

Right.

Right.

So, so keep tabs on that, you know, 11 person that, that I've gotten to know a little bit over the last couple of years is Will Guerra who's a former restaurant.

Uh And now, you know, he's just uh released his book, uh Unreasonable Hospitality.

So he, he's doing some great things and, and really you talk about, you know, we're hosting events.

Um, you know, I'd be remiss not to mention we're doing a what we call go big event down in Philly.

So, uh, that's not that far from, uh, far of a drive or train ride from, from here.

We encourage people to, uh, venture out and see if they can attend.

Uh, we do have to write wind things up here.

Really.

Appreciate, appreciate you stopping by here, Robert and Brooke, of course.

And that's gonna do it all for today's stocks in translation.

But keep it tuned to Yahoo Finance.