In early 2023, businesses face many economic challenges, including the threat of a recession, labor shortages, overregulation, and geopolitical uncertainty. The economic indicators and data visualizations below reflect this, painting a complex picture of our economy.
American business is strong and optimistic right now, but there are concerns that the economy is in a weak state, and confidence that the government will do what it can to help is low.
The U.S. Chamber of Commerce’s 2023 State of American Business event on January 12, 2023 will explore the role of business-led innovation and advance smart policies for a safer, more resilient economic future for our nation. Emphasizes the government’s role in
American business in numbers
The State of American Business Data Center diagnoses the health of America’s business and economy by analyzing 12 economic indicators for workers, IPOs, consumers, supply chains, energy and innovation. Jump to each section below for more detailed analysis and data visualization.
Labor shortage: 10.5 million unfilled jobs
The pandemic has brought about significant changes to the US labor market. The United States is experiencing labor shortages due to declining legal immigration, early retirement, and other barriers keeping workers out of the workforce, such as access to child care.
unfilled jobs in the US
The Chamber of Commerce Labor Shortage Index shows the number of workers available for every job opening. The labor shortage index is currently at 0.73, not far from the March 2022 all-time low of 0.63. This means that for 100 job openings, there are only 73 of her workers available.
Job growth has been strong this year, but the country is moving The Wrong Direction of Labor Force ParticipationIf the percentage of people in the labor force were the same as it was in February 2020, that would add nearly 3 million people to the workforce today.
Conclusion: Governments take steps to increase legal immigration while securing borders, improve access to childcare, provide job incentives and fund training programs that lead to good jobs. can help you with that. These solutions are detailed in the Chamber of Commerce’s American Works Initiative policy priorities.
Sluggish IPO and loan markets
Businesses need capital to start a business, operate efficiently, and grow. Business growth is stronger when capital is more accessible. Initial public offering (IPO) issuance is an indicator of economic vitality. More companies go public when their growth prospects are strong and they need access to the rich pool of funds offered at the time of listing.
The private sector is playing a leading role in driving innovation to solve problems, but the number of IPOs hitting the market is below average. Tax hikes, inflationary spending, government overreach, and over-regulation are robbing our economy of much-needed innovation.
Although the number of IPOs in 2022 is below average, the number of IPOs issued and the dollar value of IPOs have risen in recent years. The surge in 2021 was primarily due to an increase in special purpose acquisition companies (SPACs). Before the SPAC surge, IPO numbers were barely growing.
The dollar value of IPOs has seen strong growth in recent years, suggesting that larger companies went public after spending more years privately. In a more traditional IPO (not via a SPAC), the economy becomes more vibrant and dynamic as young companies get the capital they need to grow from the offering.
Conclusion: Wise government policies help the economy by encouraging, rather than disincentivizing, companies to continue going public.
For small businesses, commercial and industrial (C&I) loans are a major source of capital essential for growth and prosperity. The value of issued C&I loans is strong.
Conclusion: As the Federal Reserve continues to tighten monetary policy to combat inflation, C&I loans have declined, making it difficult for many businesses to access financing.
Strong personal consumption
Businesses exist to serve their customers. The more customers you get and the more those customers spend, the better for your business. Despite the turbulent economic conditions of the past few years, consumers have continued to spend. The amazing resilience of American consumers has been one of the most important economic stories since the outbreak of COVID-19.
Spending is even higher, even though inflation is near a 40-year high. For example, retail sales (spending at retailers, bars and restaurants) in October 2022 increased by a staggering 1.3%, outpacing inflation. Inflation-adjusted retail sales jumped his 0.9% as prices rose 0.4% in his October.
Conclusion: Savings from the COVID-19 shutdown period are helping customers manage inflation, but this won’t last indefinitely and is a trend to watch in 2023.
Supply chain tensions finally eased
U.S. businesses are interconnected through an interconnected global network supply chain And we rely on them to reach domestic and international consumers and to compete in the global marketplace.
An efficient supply chain is essential for business growth. The New York Federal Reserve Tracks Pressure on Global Supply Chains. A higher level indicates a higher stress on the system.
Pressures on global supply chains remained steady for years leading up to COVID-19. It spiked during the pandemic and remains elevated compared to pre-pandemic levels, but has declined significantly in recent months.
Conclusion: A well-functioning supply chain is a key factor in keeping inflation under control.
falling energy prices
Energy is a huge input cost for businesses. As energy prices rise, businesses must absorb those costs and reduce revenue or pass them on to customers at higher prices.
Energy prices, as dictated by crude oil prices, were fairly stable in the years before COVID-19. It fell while much of the global economy was shut down in response to the pandemic, then rose to record highs as the global economy reopened.
2/2natural gas price
Russia’s aggression in Ukraine is also currently causing oil prices to remain high, but prices have fallen slightly in recent months.
Conclusion: American energy production provides economic benefits to American families and businesses and weakens the economic power of aggressor nations like Russia. The most important thing Washington can do this year to help is to send a long-term signal to give energy producers the confidence and certainty they need to invest.
Heterogeneous innovation ecosystem
Innovation is necessary for the economy to continue to grow. Existing businesses need to create new products and improve existing products. Bringing fresh ideas to market requires new business.
US patented in 2011
US patented in 2020
The number of patents issued is an indicator of how much innovation is occurring in the economy over time, and the United States continues to produce a large number of patents in large numbers.
COVID-19 has reduced the number of patents issued in the US, but only slightly. The number of issued patents is strong, but less than half go to US residents.
Overall, the United States remains the leading place for innovation globally. But we need more innovation by US residents, and we need to make it easier and more attractive for innovators from other countries to bring their ideas here.
Chinese innovators file about two-thirds of all patents. The US and Japan have almost all of the remaining filings. A country with more patents sees more dynamism in its economy.
US Chamber of Commerce International IP Index assesses intellectual property (IP) rights in 55 global economies across 50 unique indicators, from patent and copyright policies to international treaty ratifications.
The United States received the highest score of 95.48 out of 100, demonstrating a strong IP framework. However, the global average remains below 60, indicating that there is still plenty of room to improve the framework for innovation and creativity in global markets.
New business forms drive innovation
Like patents, new businesses are the engine of future economic growth. The more new business, the better. Because the greater the number of new businesses, the greater the potential amount of future high-performing companies.
2020 and 2021 saw the largest increase in new business applications in recorded history. Before the pandemic, the average number of applications submitted each month to start a new business was just under 300,000. By 2021, it will average 450,000, according to U.S. Census Bureau data.
In 2021, approximately 5.4 million new business applications were submitted. This is an all-time record dating back to 2005.
TOTAL NEW BUSINESS APPLICATIONS IN 2019
Total number of new business applications in 2021
The US Census Bureau tracks monthly the number of new business formations expected over the next four quarters. The data below also shows the increase in new businesses created during the pandemic.
Before COVID-19, new business launches were going well, but when the pandemic started, Rapid increase in new business formation.
Conclusion: This could be a pandemic anomaly, or it could mark a new entrepreneurial shift. This is the metric to watch next year to know for sure.
The metrics above help gauge the health of your business and economy, like going to the doctor, remembering your cholesterol levels and heart rate.Businesses are generally doing well, but economic data lead the way The economist who forecasts A mild but short recession in 2023.
For now, companies should remain optimistic and lean on what the American business community is doing well. The ability to compete and succeed in a free enterprise system, the desire to innovate, the grit to get through difficult times, and the opportunity. To improve communities and societies.
Despite the fragile economy, American businesses will continue to do what society needs, expects, and trusts.
Current status of SMEs
The quarterly Small Business Index, published by MetLife, captures the current sentiments of small business owners, their view of the economy and the biggest challenges they face.
About the author
Chief Economist, U.S. Chamber of Commerce
Curtis Dubai is Chief Economist in the Economic Policy Division of the US Chamber of Commerce. He leads the Chamber of Commerce’s research on the U.S. and global economy.
Graphic Designer, US Chamber of Commerce