Five charts to start your day
Small businesses are feeling the effects of rising interests rates
It’s Friday. The last day of the week. I hope you have lots to look forward to this weekend. I’m sure whatever you are doing, it’s well deserved.
Coming up:
Small businesses are feeling the effects of rising interests rates
What’s the difference between job openings and unemployment?
US oil reserves are running low
The mega-techs have massively outperformed the rest of the S&P 500
The number of years a skilled service worker needs to work to buy one-bed apartment in the city centre
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Small businesses are feeling the effects of rising interests rates
Small and medium-sized companies in the US are finding it hard to cope with higher interest rates set by the Federal Reserve. In fact, they feel it more. Unlike bigger companies, they don't have a large financial cushion to rest on, making them vulnerable to higher borrowing costs. A sizeable portion of their debt also tends to be floating rate, so any rise in interest rates instantly affects them and squeezes their earnings.
For investors, this raises concerns about the financial stability and growth prospects of small-cap companies, making them riskier investments compared to large-cap stocks. More broadly, if small and medium-sized businesses struggle or fail en masse, it could have negative ripple effects across the economy, leading to higher unemployment rates or decreased market competition.
It also demonstrates the unequal impact that rising interest rates have on the US economy. Smaller companies feel it more, which are directly linked to the health of the economy.
