Economic Surveys Reveal Decline in Supply Delays Post COVID-19 Peak, Attributed to Inflation

Supply Chain Challenges, Inflation Impact, Economic Surveys

Economic Surveys Reveal Decline in Supply Delays. The challenges posed by the volatile and intricate nature of the Covid-19 pandemic were manifold for businesses. However, two challenges stood out prominently: supply chain disruptions and the surging inflation, which began to rise in the spring of 2021, quickly gaining status as a primary economic concern.

As the pandemic enforced isolation measures, demand for goods and services fluctuated dramatically, causing significant disruptions to global supply chains. Ports faced congestion, exacerbating truck driver shortages, and companies grappled with securing the necessary raw materials to meet demand. This strain was notably felt by small businesses across the United States.

While inflation started to subside as interest rates rose, it remained a persistent issue. The U.S. Census Bureau closely monitored its impact on businesses through two near real-time surveys: the Business Trends and Outlook Survey (BTOS), and its forerunner, the Small Business Pulse Survey (SBPS).

The SBPS and BTOS mirrored national indicators of supply chain pressures, but crucially, they offered timelier insights.

In August 2020, the SBPS reported that 29.4% of small businesses faced domestic supplier delays, while 10% experienced delays from foreign suppliers.

By May 2021, domestic supplier delays surged significantly to 35.8%, further escalating to 44.5% by the survey’s end in April 2022. Similarly, foreign supplier delays witnessed a substantial increase, reaching 19.2%.

With the shift to the BTOS, the collection of supply chain data continued, revealing persistent supply chain challenges for small businesses.

In July 2022, at the start of the BTOS, 36.1% of small businesses reported domestic supplier delays, and 13% cited delays from foreign suppliers. However, subsequent BTOS collections showed a significant decline in supply chain issues.

Small businesses reported a drop in domestic supplier delays from a high of 36.1% in April 2022 to 14.5% in the most recent collection period in July 2023. Foreign supplier delays also plummeted significantly to 4.3%.

In the last two weeks, did this business have any of the following?

In addition to supply chain disruptions, high inflation posed hardships for both consumers and businesses nationwide. The SBPS began gauging this impact in February 2022, asking respondents how prices for goods and services had changed compared to six months ago. Initially, 36.5% reported a large increase in prices, and nearly 40% indicated a moderate increase. By April 2022, the percentage reporting large price increases surged to 40.6%, with 78% of U.S. small businesses reporting price hikes of any kind.

Comparing now to six months ago, how have the prices this business pays for goods or services changed?

As interest rates rose and inflation persisted as a critical national concern, the BTOS closely tracked its impact on small businesses.

The survey asked businesses if, in the last two weeks, prices had increased, decreased, or remained unchanged. At the beginning of the BTOS, 62.8% reported an increase in prices, while 35.9% noted no change. Since then, the “increased” category dropped significantly to 40.0%, while the “no change” category rose notably to 58.4%.

Although still elevated, inflation rates in the U.S. have decreased from pandemic highs. BTOS data seem to corroborate this, with small businesses reporting no noticeable decreases in prices.

The SBPS initiated a successful endeavor to gather timely and accurate data on the U.S. business climate, proving particularly valuable during COVID-19.

The BTOS continues this effort, remaining a high-frequency survey reliable enough to track general trends and agile enough to adapt during economic crises.

The updated BTOS scope will further broaden its coverage to provide a more precise portrayal of the national business landscape, gathering data on the impact of natural disasters and producing crucial insights for government and business leaders.