While the worst of the economic nightmare caused by the COVID-19 pandemic are past us and the economy has rebounded, there are still major economic concerns for small businesses. As Halloween is here and just two more months remain in 2021, now is a good time at what’s scaring small business owners.
SAN FRANCISCO, CA— Gas prices over $3.50 per gallon are seen at a service station in San Francisco, … [+]
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High Gas prices
The average price of gas in October 2021 has risen to $3.38 per gallon, about $1.14 more per gallon than in October 2020. Rising gas prices impact the economy in many ways. What happens when gas prices go up? Often, consumer spending falls. Higher gas prices means that consumers have less money in their pockets to spend. For instance, a commuter will typically use the same amount of gas each week to get to work, regardless of price. Naturally, there will be less money to spend when people are paying more money for the same amount of gasoline usage. As fear of inflation grows, some people may cut back on their spending on other goods ands services, which can negatively affect small businesses.
On a macro level, oil price increases are generally thought to increase inflation and reduce economic growth. Higher transportation costs tend to increase the costs of distributing items. Small business owners, including moving companies and shipping firms, are hurt when gasoline prices go up, and in 2021, gas prices have risen significantly. Further, small companies that have vendors and suppliers that routinely deliver goods or services necessary for daily operations will see their cost of goods sold increase.
LONG BEACH, CA – OCTOBER 2: Shipping containers are left stacked in the Port of Los Angeles. (Photo … [+]
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Supply Chain Disruptions
According to a New York Times report, “How the Supply Chain Broke, and Why It Won’t Be Fixed Anytime Soon,” many products are in short supply. The disruptions go back to the early stages of the pandemic. Many of the world’s manufacturing is done in China, Taiwan and Korea, which faced slowdowns in production when workers missed time because they were sick or were prevented from going to work. Likewise, shipping companies cut their schedules as they anticipated a global drop in demand. They were wrong.
As Americans worked from home or collected generous unemployment benefits, they shopped in record numbers …….