American consumers are still spending despite relentless cost pressure — retail sales climbed 0.49% in April, the most recent month available, even as inflation sits at 4.17% year-over-year and oil hovers near $95 a barrel. For small business owners, that headline resilience is welcome news — but the cost side of the ledger remains the bigger story heading into the summer.
The retail sales number is the clearest signal that consumers haven't yet pulled back in a meaningful way. A 0.49% month-over-month gain in April suggests people are still opening their wallets, which matters if your revenue depends on discretionary spending. The risk is that this spending is partly forced — people paying more for the same goods because everything costs more — rather than a true expansion in volume. Watch your unit sales, not just your top-line revenue, to see whether you're actually selling more or just charging more.
On the cost side, energy is the pressure point to watch right now. WTI crude oil at $95 a barrel is elevated by any measure, and it ripples through your cost structure in ways that go beyond the gas pump. Freight and delivery surcharges are back. Plastic packaging, synthetic fabrics, and petrochemical inputs are more expensive. If you ship product or operate a vehicle-dependent service, your cost per job is quietly higher than it was six months ago. This is a good time to run the numbers on your delivery routes and freight contracts.
Borrowing conditions have eased modestly from their 2023–2024 peaks. The Fed funds rate is at 3.63% — meaningfully below the 5.25%+ highs — which has started to filter through to slightly lower rates on business lines of credit and SBA loans. But the 10-year Treasury yield at 4.55% means longer-term borrowing remains expensive. If you're considering a commercial real estate purchase or a major equipment loan with a 5–10 year term, the pricing is still tough. Short-term working capital credit is the better option right now if you need flexibility.
Labor market conditions are stable but not loosening. Unemployment holds at 4.3%, essentially flat from last month. You're unlikely to see the extreme hiring difficulty of 2022, but you're also not in a buyer's market for workers in most skilled trades, healthcare support, or tech roles. Wage expectations remain elevated. If you have open positions, plan for a multi-week search and budget for compensation that reflects current market rates — not what you paid two years ago.
With markets closed for the weekend, the next major data release comes early in the week. Fed officials have been largely quiet ahead of the June FOMC meeting, so any speeches or commentary from regional Fed presidents could move interest rate expectations. Keep an eye on crude oil — any geopolitical development in the Middle East has outsized influence on where WTI settles, and the difference between $90 and $100 oil has real implications for your operating costs. The June jobs report for May is also due in the coming weeks and will be the clearest indicator of whether the labor market is softening enough for the Fed to consider rate cuts.
Bottom line: Consumers are still spending, which buys small business owners time — but oil near $95 and inflation above 4% mean your cost management discipline matters more than ever right now.
Data sourced from FRED (Federal Reserve Bank of St. Louis), BLS, and U.S. Treasury. This briefing is for informational purposes only and does not constitute financial or investment advice. Disclaimer · Privacy Policy