Key takeaways

  • Small business confidence jumped above the 50-year average for the first time in nearly three years to 101.7, according to the National Federation of Independent Businesses. But perception isn't the whole story, and Bank of America internal deposit account data finds small business profitability has remained in fair shape throughout the year.
  • That's not to say there haven't been challenges – small business debt levels are rising alongside a cooling labor market. But credit availability is increasing as are capital expenditures, suggesting some of this rise can be attributed to future expansion and growth. Plus, Bank of America small business payroll growth remains positive and hiring was more than 16% above 2019 levels in November.
  • Inflation might pose the greatest risk to small businesses as we head into 2025, given Bank of America internal data shows a higher rate of acceleration in payments towards overall operating expenses compared to their payroll costs. And since shelter inflation has remained particularly sticky, it's likely rent continues to put pressure on small businesses.

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