BUSINESS + ECONOMY

Utah small businesses struggle under inflation

Jun 3, 2024, 12:00 PM

Tulie Bakery barista and baker Raquel Martinez pulls an order for a customer....

Raquel Martinez, Tulie Bakery barista and baker, pulls an order for a customer at Tulie Bakery in Salt Lake City on Wednesday, Nov. 24, 2021. (Kristin Murphy/Deseret News)

(Kristin Murphy/Deseret News)

SALT LAKE CITY – Derek Miller, the president and CEO of the Salt Lake Chamber, said that inflation has become an un-ignorable problem for many people. However, Utah small businesses get hit the most. 

“About 37%, roughly four in ten, rate inflation as their number-one concern,” said Miller. He added that the same amount was reflected by small businesses. 

“In the past, not many people were talking about inflation around the dinner table. But they’re talking about it now… The things they are eating are costing a lot more,” said Miller. 

Economic backing for Utah small businesses

Inflation increases the cost of inputs, lowers sales, and raises interest rates for small businesses. Miller called the effects a perfect storm for a state where small business is the backbone of the economy. Fortunately, he said, the economy is still strong.

According to Miller, there are three fundamental principles to make sure the economy remains strong. 

First, Utah needs a workforce that continues building small businesses and spending money.

“We are a consumer-led economy, and so the fact that people have jobs is important,” Miller said. He added that Utah needs to continue its strong business environment.

Miller said that businesses “crave predictability,” pointing to low and stable tax rates. 

Second, Utah’s reasonable regulations need to continue. Miller said the same regulator reform should be adopted at the federal level. For example, updating business licenses by email instead of mail.

Third, Miller said Utah small businesses need market access.

“We do really well in Utah at expanding outside our own borders, including outside the borders of the United States.” Despite being landlocked, midsized, and in the mountain west, Miller said Utah is a top export state.

“Exporting goods and services is just importing money.”

Improvement timeline

If Utah can follow those three principles, then Miller hopes inflation will begin going down.

“There was a goal by the Federal Reserve to get it down to 2%…. I would say coming down from 9% to 3.4%, as of April, we probably have two wheels of the airplane that have landed softly,” said Miller. 

He admitted inflation is not where the Federal Reserve wants it to be. However, inflation has gone down enough to avoid a recession. Even then, Miller thinks we can hit the goal of 2% by the end of the year.

“I’m hopeful that we can. All the indicators show we can,” said Miller. 

Related: Utah launches Startup State Initiative to help entrepreneurs and small businesses

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Utah small businesses struggle under inflation