Small business profits sink as gasoline prices soar

Small business profits are sinking as owners get squeezed by rising labor costs and energy prices spiking from the Iran war.

Why it matters: Businesses with fewer than 250 workers created half of all new jobs over the last half-decade.

The big picture: Entrepreneurs are dealing with “persistent concerns around labor availability, inflation and uncertainty about the economic outlook,” according to a new report from the Bank of America Institute.

Zoom in: Small business profitability in April suffered its biggest decline in two years, falling 1.3%, according to the report.

• That came after gas prices spiked due to the Iran war, which shut down the Strait of Hormuz, a critical global shipping lane for energy.
• The average price of gas was $4.53 on Tuesday, up 43% from a year earlier, according to AAA.

Threat level: Small businesses spent 31% more on gasoline in April than they did a year earlier, according to the BofA Institute report.

• Plus, “small business sales appear to be slowing despite strong consumer spending growth,” the analysts reported.

Yes, but: Americans are starting businesses at a record pace — an entrepreneurial hot streak that helps set the U.S. apart from the rest of the global economy, Axios’ Courtenay Brown wrote this month.

• Americans are filing paperwork to start new businesses at near-record rates — averaging 470,000 applications a month in 2025. That’s about 66% above pre-pandemic norms.

The bottom line: America’s capacity for entrepreneurialism remains strong but is coming under pressure.

المصدر: Axios