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Inflation Slowdown: A Silver Lining for Hispanic Community and Small Business Owners, But What About Recessions?
Recent data demonstrate a considerable deceleration in inflation rates, which could be an encouraging economic prospect for the Hispanic community and small business owners throughout the country. This shift occurs after 16 months of rapid price increases that have been a point of contention for the Federal Reserve ("Inflation Cooled Significantly in June", Jeanna Smialek, The New York Times, July 12, 2023).
Recently, on July 26, the Federal Reserve took action once again as part of its ongoing drive to curb inflation, by raising its key interest rate for the 11th time in 17 months (“Federal Reserve raises rates for 11th time to fight inflation but gives no clear sign of next move”, Associated Press, Christopher Rugaber, July 26, 2023).
Furthermore, the Consumer Price Index, an indicator of inflation, increased 3% in the year leading up to June, a drop from the 4% growth seen in the previous year. Particularly striking was the decline of the core index, which excludes food and fuel expenses. The rate of increase dipped to 4.8%, compared to the 5.3% rise in the year leading up to May.
This inflation slowdown carries significant meaning for the Hispanic community, which is often disproportionately impacted by the escalating costs of living. It allows for further stretching of paychecks.
This news is equally reassuring for small business owners. A slower inflation rate could mean lower operating costs and lower prices for their customers. This, in turn, could lead to a higher demand for their goods or services, spurring economic growth within their enterprises.
If the inflation slowdown persists, the Federal Reserve might further pause its interest rate hikes. This would benefit those considering borrowing money, such as small business owners planning to expand or individuals contemplating homeownership.
Despite these promising signals, there are certain reservations to be considered. The global economy, domestic fiscal policy, and unpredictable situations like the ongoing war in Ukraine can alter the current economic climate. Furthermore, individual experiences of inflation might vary depending on the specific goods and services consumed.
The impact of recessions is often overlooked, as are important byproducts of persistent recessions. For example, recessions may create opportunities for innovation within our communities. Gary Acosta, co-founder and CEO of the National Association of Hispanic Real Estate Professionals (NAHREP) and founder and CEO of the Hispanic Wealth Project (HWP) views economic downturns as potential breeding grounds for growth and expansion for the most savvy of businesses ("Can a recession be a good thing?", Gary Acosta).
According to Acosta, a recession can be beneficial for several reasons. It can reduce competition as financially weaker competitors struggle to survive. As business leaders look for ways to save money or generate revenue during downturns, they may be more receptive to new ideas or partnerships. Companies that are financially stable can outlast their competition and be more creative with pricing. Investing in employee training, testing new products, and strengthening relationships with existing customers can also be a great opportunity.
While the path to economic recovery is multifaceted and complex, the recent slowdown in inflation combined with potential opportunities that recessions can provide, may offer hidden growth opportunities for communities and small businesses facing economic hardship.
To stay on top of the latest economic trends, tune in to HWP’s Quarterly Economic Updates. Details of these sessions will be available on the HWP Events Page once confirmed
Recently, on July 26, the Federal Reserve took action once again as part of its ongoing drive to curb inflation, by raising its key interest rate for the 11th time in 17 months (“Federal Reserve raises rates for 11th time to fight inflation but gives no clear sign of next move”, Associated Press, Christopher Rugaber, July 26, 2023).
Furthermore, the Consumer Price Index, an indicator of inflation, increased 3% in the year leading up to June, a drop from the 4% growth seen in the previous year. Particularly striking was the decline of the core index, which excludes food and fuel expenses. The rate of increase dipped to 4.8%, compared to the 5.3% rise in the year leading up to May.
This inflation slowdown carries significant meaning for the Hispanic community, which is often disproportionately impacted by the escalating costs of living. It allows for further stretching of paychecks.
This news is equally reassuring for small business owners. A slower inflation rate could mean lower operating costs and lower prices for their customers. This, in turn, could lead to a higher demand for their goods or services, spurring economic growth within their enterprises.
If the inflation slowdown persists, the Federal Reserve might further pause its interest rate hikes. This would benefit those considering borrowing money, such as small business owners planning to expand or individuals contemplating homeownership.
Despite these promising signals, there are certain reservations to be considered. The global economy, domestic fiscal policy, and unpredictable situations like the ongoing war in Ukraine can alter the current economic climate. Furthermore, individual experiences of inflation might vary depending on the specific goods and services consumed.
The impact of recessions is often overlooked, as are important byproducts of persistent recessions. For example, recessions may create opportunities for innovation within our communities. Gary Acosta, co-founder and CEO of the National Association of Hispanic Real Estate Professionals (NAHREP) and founder and CEO of the Hispanic Wealth Project (HWP) views economic downturns as potential breeding grounds for growth and expansion for the most savvy of businesses ("Can a recession be a good thing?", Gary Acosta).
According to Acosta, a recession can be beneficial for several reasons. It can reduce competition as financially weaker competitors struggle to survive. As business leaders look for ways to save money or generate revenue during downturns, they may be more receptive to new ideas or partnerships. Companies that are financially stable can outlast their competition and be more creative with pricing. Investing in employee training, testing new products, and strengthening relationships with existing customers can also be a great opportunity.
While the path to economic recovery is multifaceted and complex, the recent slowdown in inflation combined with potential opportunities that recessions can provide, may offer hidden growth opportunities for communities and small businesses facing economic hardship.
To stay on top of the latest economic trends, tune in to HWP’s Quarterly Economic Updates. Details of these sessions will be available on the HWP Events Page once confirmed
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