Policy Volatility: How is it Affecting Small Business Owners?

To some extent, the jury is still out on how American small businesses will fare under the new policies of the Trump Administration.  Yet it’s also the case that the early signs are concerning.  The latest example comes from a new Brookings Institution dive into the state of Latino-owned small businesses.   The headline take-away is pretty straightforward.  Federal policy volatility is bad for business, and it seems to be especially bad for America’s Hispanic business owners.  The pattern we witnessed during the COVID 19 pandemic—where minority-owned firms faced the worst business headwinds—seems to be repeating itself due to the chaos we’re all living through today. 

These early economic distress signals are not limited to certain industry sectors or specific regions.  They are hitting all regions, including places like Texas and North Carolina, that regularly tout their business friendliness.  While we still lack good data on what’s happening in the field, early signs in Texas are alarming.  Construction employment in the Rio Grande Valley was down 5% last quarter, and overall statewide construction activity is declining.  Meanwhile, overall business uncertainty levels have reached pandemic era benchmarks.

The bottom line is clear:  to be business friendly, states and localities must also be business stable.  As the report concludes, “policy volatility is becoming a competition problem.”