Prices are rising faster than expected and Main Street is feeling it. Consumer prices are up 3.7%, PPI saw its biggest jump since 2022, and mortgage rates are above 7%. Joining me is Ben Johnston, COO of Kapitus. Ben, great to have you back.
It is great to be back. Thank you very much.
How are small businesses holding up?
Since we last spoke, not a whole lot has changed. Oil prices are still about the same. The tariff strategy remains. CPI and PPI both rose. The American consumer is still stressed and probably seeing real wage decline. Since consumer spending drives small business revenue, small businesses are treading water but struggling. They are certainly not prospering the way we would hope.
Where are they feeling the squeeze most?
Fuel costs permeate every other cost. Directly through shipping for goods in and out. But also whether customers can get to the store or employees can get to work. Fuel is driving almost all costs. Then you add the tariff impact on imported goods.
Small businesses cannot always raise prices. How are they deciding?
When you look at our portfolio, they are raising prices — they have to just to stay afloat. Businesses serving the higher end of the market can command a premium. Those servicing the lower portion of the K-shaped economy are trying to be as judicious as possible — but even those companies have to raise prices. They just cannot drop much of that to the bottom line.
What does the housing slowdown mean for contractors you work with?
Investment capital flowing into data centre construction is keeping some contractors very busy — skilled electricians, plumbers. But new housing starts are down. On the flip side, more old homes need refurbishing and families are adding instead of buying. We are still seeing demand for contractors.
What should small business owners do before year end?
Be close to your customer base. Understand where they are going in 2027 — because now is the time to build the capital plan and the hiring plan for next year.
Ben, thanks so much for joining us.
Thank you very much for having me.
