November inflation, as measured by the consumer price index, rose to 6.8%. The last time we had inflation like this was in 1982 at the end of the ’78 – ’81 recession.
Strong consumer demand colliding with pandemic related supply constraints drove prices higher last month. The emergence of Omicron this month threatens to continue this frightening climb.
When asked, 60% of small businesses stated that they increased their prices in the last 90 days, according to a poll done by Vistage Worldwide, for the Wall Street Journal. 80% of small businesses reported increased labor prices and 72% said that their suppliers had also raised their prices.
We can only assume that the supply – demand imbalance will continue for the foreseeable future, further worsening the problem.
This recovery is unlike others. Strong demand for cars, furniture, and appliances has driven most of the surge in prices. Consumers normally aren’t in a hurry to purchase durables coming out of a bad economy. This is in contrast to demand for services like travel and other leisure products that has been lighter, creating less pressure on those prices.
We all need to get ahead of this. Raising prices is never a comfortable thing, but it may be necessary. If your costs are increasing and you aren’t raising your prices to accommodate these costs, the person who will suffer is you.
This makes your accounting even more important than before. Please contact us if you have questions.
Let me leave you with this.
One of the lasting effects of the pandemic may end up being entrepreneurs choosing to shut down. I have spoken to a few clients who are actively selling their businesses because of the problems they are having with workers.
If you have a business where you can’t afford to pay higher wages, then finding and retaining quality employees is a problem. Lower end workers are in demand. That demand is causing higher prices and other situations
Some entrepreneurs complain about consistent absenteeism and the inability to create a team atmosphere to properly handle the needs of their clients. Also, the problem of many workers not knowing how to put in a solid day has some entrepreneurs getting out of the current businesses that they operate. They simply don’t believe that the problems will go away.
If you were planning on getting out it’s one thing, but I would always take a longer view.
Problems in labor markets, or any market for that matter, swing like a pendulum. At one point it may be difficult, but sooner or later it will swing back.
It may take some time, but things will go back to normal. Unless you have your next venture planned and ready, why get out because of something that’s temporary?
Entrepreneuring can be difficult. Sometimes it’s a fight, so dig a hole and shoulder a weapon. But above all, get it done.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Employee Retention Credits, PPP Loan Forgiveness, Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
www.AccountingSolutionsLtd.com
Note that the only professional services provided by Accounting Solutions Ltd. are those specified in a written communication from our office detailing the scope of services to be rendered and the terms and conditions applicable to the engagement.