Sunday, June 16, 2024

Small businesses remain haunted by the specter of inflation

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Major U.S. retailers are initiating targeted summer sales to attract customers as the specter of inflation continues to haunt the economy.

The Chief Executive Officer of Bass Pro Shops recently said as much, noting that “inflation is here [and] it’s real.” Grocery store chain Aldi announced it’s cutting prices for more than 250 products. And Walmart, Target, and Amazon are following suit.

The marketing play to attract summer shoppers isn’t surprising. Despite spin from the White House, inflation is not in the rearview mirror and high prices are top of mind for many consumers. Monthly inflation rates have moderated but the latest government data reveals the economy has reached a grim milestone: Inflation under Biden has hit 20 percent.

Translation: Under Biden, elevated inflation is a feature of the economy rather than a temporary setback.

While most facets of the U.S. economy are feeling the squeeze, small businesses are getting sucker punched the hardest. Unlike large corporations, Main Street doesn’t have the budgetary wiggle room—nor access to vast lines of credit—to participate in the marketing games of the big box stores. That puts Main Street at a huge competitive disadvantage.

New polling from my organization, the Job Creators Network Foundation, reveals the inflation migraine on Main Street is very real.

The national survey of small employers finds nearly half of entrepreneurs say inflation is either their first or second biggest concern—beating out consumer spending, taxes, and interest rates. Meanwhile, two-thirds of small businesses say the price increases their operations are grappling with are higher than officially reported inflation figures.

The White House continues to play the blame game in an effort to shore-up support leading up to November. A recent gaffe from Biden falsely claiming  the inflation rate was at nine percent when he took office rather than 1.4 percent is a prime illustration. But in the eyes of shoppers at the grocery store or small businesses that are scraping by, the White House isn’t fooling anyone.

It’s not difficult to connect the dots between Biden administration policies and inflation.

The 2021 infrastructure package is one example of fiscal irresponsibility that has fueled spiking prices. The $1.2 trillion in public funds crowded out private investment and artificially pumped-up costs that businesses and consumers are now forced to cover. When more dollars flood the market, prices inevitably increase.

The egregiously misnamed Inflation Reduction Act is another consequential misstep.

The package propped up expensive renewable energy projects to the tune of hundreds of billions of dollars while flipping the bird to more affordable—and dependable—sources. The legislation is also mucking up healthcare for seniors via government price setting that limits choice and inflates costs. Medicare Part D premiums have increased by 21 percent this year compared to 2023.

The Biden administration’s illegal student loan bailout, meanwhile, is icing on the inflationary cake. After being struck down by the Supreme Court, the White House continues to pursue backdoor forgiveness paths that now amount to nearly $170 billion in debt cancellation. Beyond contributing to broader inflationary pressures, the strategy only encourages colleges to raise tuition prices further.

American families and small businesses remain frustrated with inflation—a grievance that will damage Joe Biden’s chances of reelection come November. The president may attempt to weasel out of accountability via misleading stump speeches, but high prices at the grocery store are hard to explain away.

The Biden administration has made their bed. Now they must lie in it.

Elaine Parker is President of the Job Creators Network Foundation.

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