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SMBs Cautious In Volatile US Economy

An unstable stock market has led many small businesses (SMBs) to cut costs and change their hiring plans for the New Year. According to the Associated Press, while consumer spending and the economy are strong, consumers are spending less, which has led to worry for many SMB owners.

As a result, cost-cutting has become a top priority. For example, contractors have started using cheaper materials in response to homeowners slashing their project budgets. Developers who build houses are making smaller investments in new properties, said Kathy Barnes, who manages projects in the St. Louis area.

In addition, small business owners are slowing down their plans to hire additional employees. Instead, they're focusing on looking for more prospective customers and clients. Mark Ehrhardt, owner of Movers, Not Shakers!, a moving company in New York, revealed that he will soon be contacting mortgage brokers and building managers who can connect him with people moving out of their homes. “You just have to be smarter and figure out where the activity is,” he said.

The stock market isn't the only factor hurting SMBs. It was just reported that, with the federal government in a partial shutdown, around 30 million small businesses will likely be impacted.

For instance, SMBs looking for a loan from the U.S. Small Business Administration (SBA) won’t be getting a response during the shutdown, and even SBA loan guarantees have been suspended during this time. In addition, small businesses that have been awarded government contracts might have to deal with interruptions as a result of the shutdown.

There is also a fall in consumer confidence, especially for businesses located near a high number of government employees. During a 16-day shutdown in 2013, there was an estimated 2 percent to 4 percent fall in spending among government workers, while retail store traffic fell an average 7.3 percent each week of the shutdown.

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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