Hello there!
You’ll no doubt be pleased to know that normal service has been resumed post-halloween. We’re actually not sure we could have kept that inn-keeper schtick up for much longer tbh. The mournful darkness has, however, decided to stick around for the foreseeable.
This week there was a bubble of reporting around deteriorating Small Business conditions, from CEBA debt to crime to the general rise in the cost of doing business. There’s also some growing concern about ‘the great gloom’ - as employee satisfaction continues to drop as workers struggle with remote options, job choices and record inflation. Brad Rencher of Bamboo HR suggested:
“The new norm of ‘unprecedented times’ is causing enormous stress”
Yeah, no sh*t Brad. The world is indeed a darker place, and it’s not entirely due to outdated seasonal time-changes. It’s not enough these days to just shout ‘shop local’ and coordinate some permits for some seasonal pop-ups in an under-used parking lot. It’s not like the government hasn’t noticed. Even the head of the EU Central Bank is talking about it.
At the core of all of this, of course, is inflation. The reason CEBA debt is at a critical juncture is because money is expensive to lend. The reason crime is happening is because people are desperate. The reason businesses are more expensive to run is because things simply cost more. The reason employees are struggling to ‘vibe’ is because the cost of living is pressuring - or worse - evaporating their disposable income. It’s also the reason retailers - and governments - are sweating the incoming recession festive season.
So what to do? The good news is that inflation is coming down. It’s stubborn, and it has a long tail, but it IS trending in the right direction. Rates are not coming down before Christmas that’s for sure, but things aren’t getting worse (we hope). The question for many Small Businesses now is - is this the worst it’s going to get, and, how long can it be sustained? Small Business can’t control supplier-led inflation, they can’t control central banking or leverage better lending conditions at scale. They definitely can’t put more money in peoples pockets.
As Ross Hickey, an associate professor of economics at the University of B.C. Okanagan suggested:
“Inflation's come down quite a bit since its peak over the last year, but … just because inflation is dropping, does not mean that the prices go back to normal," Hickey said. "Prices remain high. And with these high prices and the high interest rates, that's affecting consumers.”
And to navigate this, Small Business owners are pivoting in ways they hadn’t considered before. Pride is OUT. Survival is IN.
"In my memory, this is the hardest season I've ever experienced in this business," said Sarah McClean, the owner of two restaurants in Powell River, B.C. "My fear is that it's not a season."
Indeed, Sarah. INDEED.
Normally in the huuman Layer, we get jokey and choose a lighter take on the weekly grind, but there’s so many chickens coming to roost right now post-plague and post-peak inflation it feels like the only thing we can do is state the obvious: running a Small Business is incredibly hard, and right now it’s near-impossible.
Let’s be clear here - the new normal is not normal. If you feel like you’re fighting right now, you’re not alone - reach out. If you know of others in the same position, talk to them. If you’re not running a Small Business right now, be supportive however you can. Go shout at your local representatives. Get messy with it.
Things will get better - and soon. Until then, we’ve all just got to get through it - somehow - intact.
BTW - did you know you can reply to this email? We always read the responses and welcome feedback. Let us know what you like, what you don’t and what you’d like to see more of in the future!
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SBF: Savings Be Faltering
This week Jay Dort has been checking out the ‘vibe shift’ in savings.
The Sam Bankman-Fried verdict is another nail in the coffin for not just crypto, but also easy money. A very public trial which centers around the theme of “where did billions of dollars disappear to” isn’t as theatrical as many of us were expecting when charges were originally laid in December 2022. A lot has happened since then –with crypto being a shadow of its former self, and a suspicious lack of thousands of self-identifying overnight-millionaire bros posting YouTube videos on how to 1000x your portfolio in 3 months. Talk of volatility, arbitrage, calls, and puts, seems to be down across the board, but does that amount to anything more than a “vibe shift”?
Statcan recently released a 2022 Canadian Internet Use Survey and it included most of what you’d expect: internet usage is way up, cyber security is an even bigger issue, everyone buys everything online. There was a section on banking and investing that took me by surprise, though: “More than three in four Canadians (78%) used the Internet to conduct general online banking, and one in six (16%) used it to manage investments online, such as stocks, mutual funds and cryptocurrencies.”
That’s a huge disparity between online banking and investing. Most research puts the eCommerce rate at ~75% of the Canadian population, so online banking is even more popular than buying stuff online. That number is even higher in the US with ~90% of Americans opting to bank digitally.
So if online banking is so prevalent, why is online investing lacking when there was such a prevalence of crypto-induced FOMO? The high-risk-high-reward investing trend could’ve been correlated with the intense savings rate lurches seen in both Canada and the US. Over the last 3 years personal savings rates spiked at lockdown-related heights of 26% (Canada) and 33% (US), and then sank to current-day levels of 2.9% (Canada) and 3.4% (US). There was a brief period from 2020-2021 where most households were holding onto more cash than ever before, and it’s reasonable to assume this might’ve sparked a heavier appetite for risk. With savings rates down so low right now, it’s no wonder that the fervor we once saw has calmed down into much less adventurous chatter. At the end of 2022 the average household savings in Canada were $1,750 CAD and average individual savings for Americans weighed in at $5,000 USD. With such a wide swing in disposable income slotted for the market it’s no wonder that people are opting for low-to-no-risk investments such as HISAs and GICs. SBF might be the poster child for the foregone glory days of DIY venture, but the goldrush certainly feels over.