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Federal Reserve rate hike expected to impact small businesses

West Palm Beach shop owners not immune to impact
Posted at 11:54 PM, Nov 02, 2022
and last updated 2022-11-03 08:28:19-04

WEST PALM BEACH, Fla. — The latest Federal Reserve rate hike is expected to impact everything from wholesalers to small business owners. That's according to financial advisor and small business mentor Jason Jackson.

Jackson is the Chairman of SCORE, a volunteer-run nonprofit that advises businesses in Palm Beach County.

He said small businesses will likely see several areas of their business impacted, including small business loans.

"Interest rates are going to go higher, which means the cost of borrowing money is going to increase, which means the cost of goods all the way through the supply chain are going to increase," Jackson said.

It's not good news for business owners like Denise Hull, who is no stranger to financial hardship.

Hull opened her pet boutique, D is for Dog, in downtown West Palm Beach, just two months before the pandemic hit.

"It's been a journey," she said, "but we stayed the course."

On the tail end of a pandemic came rising inflation and supply chain issues.

"The cost of shipping is out of this world," Hull said.

In addition to the increased cost of shipping, the cost of the goods she sells at her store and the rent she pays on both her downtown shops spiked this past year.

"I also have D is for Design, a little gift shop four doors down. All of those rents went up," she said.

Now, the Federal Reserve hiked interest rates multiple times since March. This latest rate hike is likely going to raise the price of the goods she buys from wholesalers even more.

"The point of raising rates is to take money out of circulation. It is to increase the cost of goods and to slow down the stimulation of the economy," Jackson said. "So we imagine folks in the retail section and others are going to be affected."

Jackson added that cost will likely trickle down to the price you pay at the register.

"They're going to have to pass on that cost somewhere," she said.

That's a fear for Hull, who so far has been able to keep many costs down for her customers. She hopes to be able to continue to do so. After all, her four-legged clients kept her afloat through it all.

"We appreciate all the support," Hull said. "With all the new people moving here, we're hoping to spread the word and get that traction going, too."

Jackson said a way to help is to support local businesses in the area. Although it may cost a little more, he said that money not only keeps businesses afloat, it also pours back into the economy.

He also recommends small business owners seek financial advice to properly manage any small business loans that will see interest rates spike, which SCORE will do for free.