Business leaders weigh in on inflation impact as CPI eases

Writer: Ryan Gandolfo

July 2024 — Inflation, a closely monitored metric that helps inform the Federal Reserve’s interest rate decisions, cooled in June for a third consecutive month — a semblance of continuity for what business leaders across the country have been describing as uncertainty and volatility.

Overall consumer prices declined 0.1% from May to June, the Labor Department said Thursday, the first monthly drop in the reading since May 2020. Taking out food and energy, CPI rose 0.1% in June, also down from 0.2% in May.

While inflation has been cooling, it remains front and center for Americans and their perception of the country and economy. In May, a Pew survey found 62% of U.S. adults view inflation as a “very big problem for the economy,” a 3% decrease year-over-year. 

Despite challenges, the majority of public and private sector decision-makers view their organizations’ performance favorably in the latest Capital Analytics Business Sentiment Survey (CABSS), conducted from April 2024 to June 2024.

READ MORE: Q2 business sentiment steady despite uncertainty

In recent months, business owners and office leaders shared how they are navigating inflation and other key economic challenges in 2024.

Nicole Chapman, Northeast Chapter Director, Florida Restaurant & Lodging Association

There is also a slight softening of the economy, leading to uncertain occupancy rates for hotels and reduced discretionary income for families due to inflation and other costs. This means people might dine out less frequently. For example, McDonald’s recently launched a $5 value meal. Many local restaurants will be asked about their “value meals,” but they do not have the same pricing flexibility as McDonald’s. Staying current with trends and ensuring our guests can afford what we offer is essential.

Robert Peek, Chief Commercial Officer, Jacksonville Port Authority (JAXPORT)

Volatility is one of the main challenges facing our industry. The world kind of understood how things were going to transpire until the COVID-19 pandemic. There has been a delineation between pre and post-pandemic, with a tremendous amount of volatility in our industry post-COVID-19. People were staying home during the pandemic, and for a short period nobody was shipping much. Then, there was a sudden, massive amount of shipping. In other words, there was a little valley followed by a huge peak of shipping that started falling in 2023. That is spiking again today in terms of demand for shipped goods, and pricing has followed that. Shipping costs have followed those peaks and valleys, so it is difficult to forecast because of the volatility. Much of the volatility is driven by global issues, such as terrorist attacks in the Red Sea to a drought impacting ship traffic through the Panama Canal, as well as the Mideast war, and economic issues like stubborn inflation and high interest rates. Most companies have reported difficulties forecasting for the next budget cycle because there is so much uncertainty that has been thrown at international trade.

Patrick Mumford, President & CEO, Gaston Business Association

Inflation and high interest rates impact everyone. The current rate environment isn’t favorable for development, requiring debt financing, causing some slowdown. Projects with secured financing continue, but future activity may decrease. The national political environment also adds uncertainty, leading businesses to hesitate in investments and hiring. Despite these challenges, being next to Charlotte offers cost advantages for Gaston. It’s relatively less expensive to buy land, and to operate a business in Gaston, resulting in our recent growth surge. Traffic, while a concern for many current residents, is manageable compared to larger cities. People from outside the region see opportunities for quality returns on investment in Gaston County.

Jose Luis, COO, Goodwill Industries of the Southern Piedmont

I am bullish not just about our firm but also about our city, county and region as a whole. Notable developments, such as the Wekiva Parkway (SR 429) expansion project, will spur further growth in a region already projected to reach 5.2 million residents by 2030. This population boom raises infrastructure and transportation questions, though recent real solutions like SunRail and Brightline provide some help. Despite uncertainties around inflation and interest rates, there is a palpable sense of opportunity in Central Florida, as evidenced by the number of new businesses relocating to our region.

Joe Pitts, Mayor, City of Clarksville

Workforce recruitment and retention continues to be a challenge for us. Staffing and retaining employees in some parts of our organization, such as public safety, is difficult because surrounding communities and the state government pay good money for those positions. We have this momentum of people moving into our community to search for jobs or because they have found better employment. Additionally, between 200 and 400 soldiers transition out of the military at Fort Campbell every month. We are trying to retain that talent in our market but must do better at offering jobs that fit those skill sets and salary expectations. 

On the other hand, we are beginning to see construction inflation level off. More contractors are bidding on jobs, which means better competition for pricing. Nevertheless, we are still seeing inflation on supplies and equipment, which is everything from vehicles to transformers.

Top image via Federalreserve/Wikimedia

For more information, visit:

https://www.clarksvilletn.gov/
https://goodwillsp.org/
https://www.gastonbusiness.com/
https://www.jaxport.com/
https://frla.org/