"For the first time in a year-and-a-half, the growth engine of America's small business economy has sputtered, with profitability growth slipping into negative territory in November. According to the December edition of the Small Business Checkpoint from the Bank of America Institute, rising costs associated with tariffs and inflation are forcing Main Street merchants to raise prices at historic rates, even as the holiday shopping season offers a critical lifeline."
"Within wholesale, durables such as the tariff-exposed electronics and furniture have driven most of the decline in the second half of the year, although non-durables like apparel are also down so far this quarter. This contraction signals that while revenues are still coming in, the cost of doing business is eating away at margins faster than sales can compensate. The data suggests that for many owners, absorbing tariff-related costs is no longer an option; they must charge more to survive."
Small-business profitability slipped into negative year-over-year growth in November (-0.02%), the first decline in 18 months. Rising costs from tariffs and inflation pushed a record share of owners to raise selling prices, with a 13-point jump to a net 34% raising prices. Wholesale trade led sector declines, down 1% in November, driven by tariff-exposed durables such as electronics and furniture and softer apparel sales. Revenues remain positive overall, supported by holiday shopping and Small Business Saturday, but higher input costs are eroding margins and forcing many owners to increase prices rather than absorb expenses.
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