The NFIB Small Business Optimism Index decreased slightly in January to 97.1, down 1.8 points from December. Inflation remains a problem for small businesses as 22% of owners reported that inflation was their single most important business problem, unchanged from December when it reached the highest level since 1981. The net percent of owners raising average selling prices increased four points to a net 61%, the highest reading since the fourth quarter of 1974.  More small business owners started the New Year raising prices in an attempt to pass on higher inventory, supplies, and labor costs.  In addition to inflation issues, owners are also raising compensation at record high rates to attract qualified employees to their open positions.

Consumers ended 2021 with record levels of debt, leading into a year in which interest rates are expected to rise substantially.  Total U.S. consumer debt at the end of the year came to $15.6 trillion, a year-over-year jump of $333 billion during the fourth quarter and just over $1 trillion for the full year, according to data released from the Federal Reserve’s New York district.  The quarterly rise was the biggest since 2007, and the annual gain was the largest ever in records going back to 2003.

The U.S. trade deficit in goods soared to record levels in 2021, topping $1 trillion as Americans continued to spend heavily on computers, toys, bicycles, clothing, pharmaceuticals and other goods made in foreign factories during the pandemic.  The overall trade deficit in both goods and services also hit an annual record, rising 27 percent as the country’s imports far outpaced its exports.