“The labor shortage is holding back growth for small businesses across the country,” NFIB Chief Economist Bill Dunkelberg said Tuesday, in the color accompanying the May vintage of the organization’s optimism survey. The headline print was largely unchanged from April.
“If small business owners could hire more workers to take care of customers, sales would be higher and getting closer to pre-COVID levels,” Dunkelberg continued, before describing inflation on Main Street as “rampant.” Small business owners, he remarked, “are uncertain about future business conditions.”
Notably, the net percentage of small businesses raising average selling prices moved higher to a seasonally adjusted 40%. That’s the highest in more than four decades.
Nobody wants to hear that inflation is “rampant” on Main Street, that’s for sure. Of course, inflation is “rampant” on Wall Street too, only that doesn’t help Main Street much because, as I never tire of reminding folks, Main Street doesn’t own any stocks to speak of (familiar figure below).
Equities only work as an inflation hedge if you own some.
The NFIB struck a somewhat ominous tone. “Inflation on Main Street means inflation for the whole economy,” the May survey said.
Last month marked the fourth straight record high for unfilled job openings in the survey.
“Owners are offering higher wages to try to remedy the labor shortage problem,” Dunkelberg went on to say. “Ultimately, higher labor costs are being passed on to customers in higher selling prices.”
This was the latest in a string of data (“hard” and anecdotal) that suggests labor market distortions and price pressures are pervasive as the world’s largest economy ramps up and businesses look ahead to what many believe will be a kind of “summer renaissance.”
Some readers are probably tired of hearing me use that term. And in some respects, it is a hilarious misnomer. “Renaissance” typically alludes to culture and that has sophisticated overtones. There’s not much that’s “sophisticated” about American summers.
But culture need not be sophisticated. Cheap daiquiris, jello shots and spending vacations shopping and eating (things you could do while not on vacation) typify American culture. And while those things were possible last summer, the angst was palpable — the economy tried to reopen but everyone, including COVID skeptics, realized things weren’t normal. Businesses operated in a maddening “stop/start” environment while trying to navigate constantly changing state and local restrictions which often contradicted federal guidelines, on the rare occasions they could be divined.
So, “renaissance” it is. I’m seeing it just a few miles (if that) from the little island I call home. There are larger, adjacent islands that are more amenable to tourists, and I’ll confess I’ve ventured about lately in an effort to gauge the veracity of the whole summer economic renaissance theme. If this area is a microcosm, I can attest that Americans are back to doing what Americans do on vacation — gorging on cheap seafood, buying things just to buy them (I saw a vacationer buy three blow dryers at Walmart on Sunday), dragging shrieking, sunscreen-slathered children around by one arm and hauling a totally unnecessary number of implements onto the beach by way of tailgater wagons not designed for sand.
I imagine the same scenes are playing out across the country, and not just at beaches. I spent time living near one of the most tacky mountain retreats in America, and I’d wager everything I own the place is teeming with tourists clamoring for cabin rentals. They won’t hike, though. They’ll play miniature golf, ride roller coasters and visit the area’s various “museums,” most of which are really just confection factories. (It’s a horrible place.)
Based on the NFIB anecdotes, all of these activities are getting more expensive by the minute. But if folks are still buying three hair dryers at one time just to get the “perfect” look for what was almost surely a week at a timeshare (it’s all timeshares on the adjacent islands here), costs must not be too prohibitive. At least not yet. Thank goodness for “Made in China.”