Tuesday's Scoop: Uncertainty🌤️

Hey friend - welcome back to your daily scoops on the economy and companies impacting your life. We’ve got some special stuff cooking behind the scenes. Big things ahead!

Here’s what you need to know today to inform your work, spending, and investments…

1. More Americans are falling behind on their debt payments.

2. Businesses’ costs are climbing, signaling higher prices ahead.

3. Small businesses continue to struggle.

Unemployment Rate: 3.9%
^{Still near the lowest rate in 50+ years}

Small businesses are struggling. The National Federation of Independent Business’s (NFIB) Small Business Optimism Index inched slightly higher in April after falling to its lowest level in 12 years in March. It was the 28th straight month of pessimism, as small businesses faced rising supply costs, hiring challenges, and demands for higher wages. The competitive job market has a higher share than usual of business owners planning to increase employee compensation this year.

Inflation Rate: +3.5% (YoY), +0.4% (MoM)
^{Policymakers aim for 2% YoY inflation. (March CPI)}

More Americans are falling behind on their debt payments. The New York Federal Reserve reported credit card delinquency rates have risen quickly from low levels of the past few years. Over the past year, roughly 9% of credit cards and 8% of auto loan balances have become over 90 days overdue. Credit card delinquencies have increased rapidly over the past few quarters, with the percentage of delinquent balances at the highest level in over a decade, including the pandemic. Auto loan delinquencies are quickly nearing pandemic levels, and other debts have worsened. Many Americans have spent the extra cash built up from the pandemic and now face higher living expenses and more expensive borrowing costs. Average credit card interest rates are over 20%, making it more difficult for consumers to pay off their balances.

Businesses’ costs climbed last month, raising concerns about potential price increases for consumers. The Labor Department reported a 0.5% jump in the producer price index (PPI) in April. That follows a steep 0.3% and 0.6% rise in January and February before a slight -0.1% decline in March. Wholesale costs are up 2.2% over the past year. Volatile food and energy prices have brought overall costs down so far this year. When excluding those categories, prices for other goods and services in a company’s supply chain have inflated 3.1% over the past twelve months. That’s the most significant year-over-year increase since last April, indicating an acceleration in costs that could result in more inflation for shoppers.

The Market: ⬆️ +0.5%
S&P 500: 5,246.68
1Mo: +4% | 1Yr: +27% | 5Yr: +84%

The market drifted higher on Tuesday as investors celebrated a better-than-feared report on wholesale inflation. Businesses' costs are climbing, though, which could lead to higher prices for shoppers. All eyes will be on tomorrow's consumer price inflation report.