Main Street’s Looking Pretty Sunny These Days
On Tuesday, September 13, 2022, the Dow dropped 3.94% after an August inflation report indicated a 0.1% month-over-month rise. Tech stocks bared a large brunt of the losses, with Meta dropping 9.4% and the Nasdaq composite closing at 11,633.57, or down 5.16%. The overall loss of 1,200 points erased recent gains the DOW had made and sent a signal to Wall Street that current efforts by the Federal government to ease inflation through rising interest rates aren’t working or working fast enough.
The news may not be rosy on Wall Street, but what about Main Street? How have rising interest rates and inflation impacted the other side of the equation? “If you dig deeper, something interesting is happening, Zaid Rahman, Founder & CEO of Flexbase, said. “Main Street is doing really, really well. If you look at businesses that are not in tech, not in white-collar industries, these companies are doing better than they’ve ever done before.”
Why is that? Gas prices peaked in mid-June and fell by over $1.25 per gallon. That price relief helps offset some inflationary pressures on small businesses. With hiring still on a rising trend, the Wall Street woes for investors don’t appear yet to be affecting non-tech, small businesses. “If you talk to a small business owner, the number one thing they’re going to complain about is they don’t have enough blue-collar labor they can hire,” Rahman said.
Before the Covid-19 pandemic, Blue Collar businesses faced a growing worker shortage. And during the pandemic, the job crisis grew, as many Americans left traditional blue-collar work for work-at-home employment or retired. Supply chain issues continue to cause problems meeting demand, worsened by the lack of blue-collar manufacturing and distribution workers, which lost millions of jobs at the onset of the pandemic and haven’t been able to replace all of them. Leisure and hospitality are two industries with the highest hiring rate since the pandemic, and the food sector still struggles to hire and retain workers. Manufacturing lost millions of jobs at the onset of the pandemic and hasn’t been able to replace all those jobs.
If the Tech sector continues to haunt Wall Street, it may be worth walking over to Main Street, where the sun’s shining brighter. Still, Main Street needs a workforce and access to working capital to meet the continued demand. Strengthening Main Street’s resources in the short term might be the economy’s best long-term strategy.
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