As of recent years, women-owned businesses in the United States have experienced significant growth and have become a substantial force in the economy. It is estimated that there are more than fourteen million women owned business generating over two trillion dollars in annual revenue. The growth in women owned businesses has been fueled by a myriad of reasons, is occurring across all age groups and serves a diverse number of industries. Even with the growth in the number of women owned businesses and the economic impact these business have, women owned businesses are still underserved in the commercial credit markets. Female business owners tend to operate in industries that have a greater need for continuous working capital, thus women owned businesses tend to rely on revolving credit lines. Even with this demand for capital, women business owners are hesitant to apply for financing, and when they do, they are receiving a growing proportion of commercial credit, but the amount of credit granted still trails that of men. The recent growth in women owned businesses could be a driving factor in this disparity. New business have limited to no commercial credit history forcing lenders to evaluate the guarantor’s personal credit. On average, female business owners have a lower consumer credit score, which could be because they are carrying more personal debt to fund their businesses, ultimately decreasing their access to commercial credit. There are a number of factors that when combined, are limiting equal access to commercial credit for female business owners. The good news is that the number of successful women owned businesses continues to climb, and more grants and loans are available to women business owners. What I am watching While inflation in the U.S. is easing, it is still above the Fed’s 2% target. It is widely expected that the Federal Reserve will begin to lower interest rates later this year. It appears that the anticipated recession which led lenders to tighten credit will not occur. Therefore, lenders will likely begin to loosen credit criteria and potentially provide more opportunities for women-owned businesses to obtain the credit they need to operate and expand.

As we enter 2024, small businesses face both opportunities and challenges in the evolving economic landscape. Brodie Oldham, Experian's V.P. of Commercial Data Science has prepared an extensive review of the current landscape in the latest report. Here are some key takeaways: The Labor Market is Cooling The red-hot labor market of 2021-2022 is cooling. Job openings have declined 19% from last year. This gives employers more leverage in hiring and tempers wage growth that drove inflation. However, it means consumers have less discretionary income to drive spending. Small businesses should budget conservatively around labor and consumer demand. Prices and Inflation Easing Inflationary pressures are beginning to ease after hitting 40-year highs in 2022. Consumer and producer prices are rising at a slower clip, though still elevated. This relief gives small businesses some reprieve after two difficult years of escalating costs, but staying lean on operations and monitoring inflation remains prudent. Consumers Remain Resilient Despite economic uncertainties, consumers continue spending more than expected. Holiday sales closed 2023 at a robust 5.8% growth over 2022. Savings rates have also rebounded. This resilience bodes well for small businesses heading into 2024. However, high debt servicing costs and inflation strain consumer budgets. Small businesses should focus on value, loyalty programs and personalized service to attract recurring sales. Credit Environment Tightening As the economy cools, lenders are tightening credit standards and limiting exposure to riskier borrowers. Interest rates remain high after aggressive Federal Reserve hikes. This may require small businesses to look beyond traditional lenders for financing needs. Building strong cash reserves and maintaining good credit health is critical to accessing affordable capital. Recession Risk Still Looms While key indicators show the economy avoiding an immediate downturn, global headwinds such as supply chain disruptions, market volatility and geopolitics could slow growth in 2024. Small businesses should stress test their models for revenue scenarios and have contingency plans ready. Cost control, customer retention and strategic partnerships will help small businesses stay resilient if conditions deteriorate. Technology and Innovation AI and digital solutions will streamline lending processes and allow for faster, data-driven loan decisions. Small businesses should embrace digital tools to enhance customer experience, operational efficiency and data analytics capabilities. Targeted digital marketing and social media outreach will also help small businesses boost visibility and sales. Despite risks, small businesses have proven their mettle handling successive economic shocks. By monitoring trends proactively, stress testing their models, and leveraging technology, small businesses can continue to adapt and innovate in 2024. Though the terrain ahead remains challenging, the resilience and tenacity of small business owners points to brighter days ahead. Download Beyond The Trends Winter 2024 Report

Retail sales reached a 4-year high of over $615B in December 2023 with yearly retail sales growing 4.6%. At the same time, lenders are tightening credit and businesses within the retail sector are showing signs of stress with higher late-stage delinquency rates and falling commercial credit scores. We see retailers seeking commercial credit less often, new originations slowing and lower lines over the past several months. As retail sales continue to rise so does the proportion of online retail sales. Online sales peaked during the COVID-19 pandemic and fell slightly once the lockdowns were lifted. Online retail sales remain approximately 56% higher than pre-pandemic levels and are trending up and may soon exceed 2020 levels. Growth in online retail sales has led to growth in retail returns. Retail returns peaked in 2022 at over $800MM and over 16% of total retail sales. Prior to 2021, retail returns as a percentage of retail sales averaged 8.9%, since 2021 that rate has grown to 14.6%. As returns increase so do fraudulent returns. Retailers have implemented strategies and solutions to address retail returns which resulted in a decrease in return dollars between 2022 and 2023 yet the percentage of returns that were fraudulent increased from 10.2% to 13.7% or over $100B. Increases in both legitimate and fraudulent returns are prompting retailers to identity solutions and operational strategies to slow growth across all returns. What I am watching: The U.S. economy expanded 3.3% in Q4 2023, and 2023 real GDP increased 2.5% over 2022. Strong consumer spending fueled the economy. Multiple sources are expecting The Federal Reserve to cut interest rates up to six times in 2024 with the rate cuts beginning in Q2 2024 and continuing into 2025. Lower interest rates likely means that consumer spending will continue at an elevated rate. As spending continues to increase, specifically in the retail sector, the need for commercial credit could continue to slow as cash-flows satisfy operational capital requirements. Cash on hand should begin to satisfy outstanding delinquencies, improving commercial credit scores resulting in improved access to commercial credit.

Small business owners’ optimism remains low due to concerns about the economy and credit conditions. According to the NFIB survey, business owners do not expect current business conditions to improve in the coming months and report that financing is their top business problem. Stringent credit underwriting policies are creating an environment where owners’ current borrowing needsare not met. According to the Federal Reserve’s SLOOS report, many lenders were loosening credit policies in mid-2022, making credit readily available to small business owners. As inflation and interest rates began to rise, commercial credit delinquencies began to increase at a rapid pace and lenders tightened credit underwriting criteria to mitigate accelerated risk. It appears that efforts have worked. Across most commercial credit financial products, the increase in delinquency rates slowed over the past few months. The loans originated under the tighter underwriting is proving to be lower risk. At the same time, account closures have increased suggesting that high risk default accounts are being removed from lenders portfolio’s thus leveling late-stage delinquency curves. As observed in the commercial credit cards space, late-stage delinquencies are leveling out. Lenders continue to issue commercial cards to lower-risk borrowers and while the average loan/line amount for all other financial products has been decreasing month over month, commercial card limits have increased. Monthly lower risk commercial card originations coupled with monthly high risk commercial card account closures is in part slowing and leveling late-stage delinquency rates in the commercial credit market. What I am watching The commercial credit market could shift in 2024. As reported in the SLOOS survey, while lenders are still tightening credit, fewer of them tightened in Q4 2023. If the economy can achieve a “soft-landing” rather than go into recession, lenders will be even more likely to loosen credit standards. The Federal Reserve is expected to start reducing interest rates in 2024, thereby making borrowingmore affordable. According to the December NFIB survey, business owners are planning capital outlays, increases in inventory, increases in hiring in the coming months but require commercial credit to do so. These business expansions will rely on the availability of credit.

Anyone who’s traveled internationally knows the world is a big place and every country has differences, however big or small. But how do those differences affect evaluating credit risk of foreign businesses?The truth is, international data is as nuanced as the countries themselves and once you scratch the surface, understanding credit risk solutions isn’t as straightforward as it seems. Many domestic assumptions don’t hold when working with international data. We’re seeing a trend across industries that may resonate with you: domestic credit managers are increasingly being tapped to take over a portion or all of their organization’s international portfolio. Sound familiar? Kyle Matthies, Experian's Director of Product Management delivered a very informative 15-minute Sip and Solve talk about the pitfalls and challenges of international data, check it out. Watch Our Sip and Solve Session What You Will Learn: Defining International Data: Demystify international data and its significance in global business. Components of Business Credit Reports: Understanding the elements that make up comprehensive business credit reports in an international context. International Data Challenges: Exploring the hurdles and complexities in gathering and interpreting global credit data. Bridging the Language Gap: Learn how to translate linguistic hurdles into effective risk assessment and communication. Assumptions Domestic Credit Managers Make: Debunking common misconceptions held by domestic credit managers when dealing with international data. Want more information about what Experian has to offer to help you assess international risk? Gain valuable global insight to reduce risk and increase profits through our international reports. Learn More

The November jobs report paints a picture of a robust yet nuanced job market. While job gains and a low unemployment rate inspire optimism for a soft-landing scenario, the cooling employment growth reflects the impact of Federal Reserve interest rate hikes on consumer and business activities. Labor shortages are gradually easing, but challenges persist, particularly in the service sector. Wage growth is slowing down, offering relief from recent highs and contributing to the mitigation of inflationary pressures. Moreover, a new layer of complexity emerges with a rise in layoffs, totaling over 16 million in the first 10 months of the year, representing a 12% increase from 2022. Although layoffs are expected to rise further as the job market normalizes, projections indicate that the numbers will stay "well within the norm." Examining specific sectors reveals unique dynamics. The health care industry, propelled by long-term structural factors, continues to add jobs, providing stability to the overall economy. Conversely, the retail trade sector experiences job losses despite strong sales, signaling the industry’s transition to online channels and COVID-related changes in retail behavior. Navigating this intricatelandscape requires keen insight into sector-specific trends and an awareness of the evolving dynamics shaping the broader economic trajectory. What I am watching: Following the positive November inflation and labor market reports, the Federal Reserve did not change interest rates at their December meeting. After the aggressive interest rate increases since March 2022, this is now the third consecutive meeting with no change, but the Fed indicated that there will be multiple rate cuts beginning in 2024 and beyond. One key to the economy will be how consumers approach holiday spending. With consumer confidence low and news of upcoming layoffs, people may tighten their belts, thereby slowing the economy. Download Report Download the latest version of the Commercial Pulse Report here. Better yet, subscribe so you'll get it in your inbox every time it releases, or once a month as you choose.

As new car production is finally nearing pre-pandemic levels, supply is catching up to demand. For many potential new car buyers that held off because of the tremendous mark-up on new and usedcars during the pandemic, the beginning trend of new car incentives and discounts is welcoming. However, the increase in car loan interest rates are eating up any incentives being offered, and those consumers who have patiently waited are actually worse off now than if they had purchased a car during the past couple of years. Many consumers did purchase cars during the pandemic, driven by necessity. During the pandemic, jobs were lost due to business shuts downs, and many were forced to seek new job opportunities. As remote work became the new normal and the demand for delivery of food and products skyrocketed, people purchased cars at marked up prices to employ themselves to meet this increasing demand. It turned out to be a good business decision as higher interest rates now make car purchasing an even more expensive experience. What I am watching: It will be interesting to see how quickly the automotive industry and car dealers increase the incentives to offset the increased cost of borrowing to purchase a car. After the aggressive interest rate increases by the Federal Reserve to combat inflation over the past 18 months, there is rumbling that the Fed will soon begin cutting rates. If interest rates come down and borrowing for auto loans is more reasonable, the increase in demand will be a welcome sight for the auto sector that finally was able to ramp up supply.

The aggressive interest rate hikes instituted by the Federal Reserve over the past year and a half may have achieved the desired goal. Easing inflation (3.2% in October) and strong GDP growth (4.9% in Q3) are some of the first indications that the economy may experience the “soft landing” hoped for instead of a recession. The consistently strong labor market produced low unemployment and increasing wages, enabling personal spending to increase. However, while spending continues to grow, the growth rate is on a downward trend. The high rate of spending has been driven by consumers digging into savings and borrowing more. As savings dwindle and the cost to borrow increases, it is likely that consumers will retreat and the pull-back will likely hit discretionary categories first. What I am watching: Heading into the holiday season, consumer spending is still strong but how long will it last? The National Retail Federation is projecting that November and December retail sales will grow 3-4% which is in line with the 3.6% average increase from 2010-2019 but lower than the past three years. People are already dipping into savings and borrowing more to continue their consumption but that well will run dry at some point. In addition, 36% of consumers cite December is a month for seasonal financial distress, according to PYMNTS. While consumers may continue spending through the holiday season, the tide may turn in early 2024 when bills hit with higher interest rates. Download Full Report Download the latest version of the Commercial Pulse Report here. Better yet, subscribe so you'll get it in your inbox every time it releases, or once a month as you choose.

Since the COVID-19 pandemic, the U.S. labor market has shifted. Compared to pre-pandemic levels, there are more people employed yet a lower labor force participation rate, higher quit rates and more job vacancies which results in a tight labor market. A tight labor market is empowering workers, and they are exercising that power in the form of worker strikes. In addition, new technologies such as in the auto industry and new business models such as streaming in the entertainment industry, are creating driving the need for employers to address changes to worker contracts. Inequality in the employer/employee relationship over the past few years has fueled worker unrest and they are now exercising their power in a demand for higher wages and benefits or a greater share in profits. 2023 is proving to be a landmark year in terms of the number of strikes as well as union elections. The result of these strikes has proven beneficial to workers with employees at major companies receiving significant increases in yearly compensation and benefits. Labor union participation rates have been declining since 1983 and reached historic lows in 2022, however, the number of workers represented by unions increased for the first time since 2017. The United States is experiencing a shift in states and unionization rates with some historically low union states experiencing significant growth. While unionization rates in total are decreasing across most industries, others are increasing their union efforts and demanding and achieving results. It is a challenging environment for employers and employees as inflation and high interest rates put pressure on the United States economy. As unionization rates have declined it has increased income inequality and lead to reductions in middle class income. This pressure on many employees in the United States has driven union approval rates to the highest levels since the mid 1960’s, with the majority of adults seeing the decrease in unions as a bad sign for the country and the labor force. What I am watching: The power and effectiveness of union walk-outs and strikes is being recognized in the United States workforce. Earlier this year, UPS and the International Brotherhood of Teamsters representing more than 300,000 UPS employees, negotiated and approved a new 5 year-contract with more than 86% support. The union’s president stated, “the contract was the most lucrative ever at UPS and would serve as a model for other workers.” The success of this effort has resonated in the economy with most notably the United Auto Workers staging walk-outs across multiple auto manufacturing plants which has resulted in a tentative contracts with the three Detroit automakers. The results of unionization are being recognized and union efforts are spreading across multiple industries. With employees realizing there is power in numbers it is anticipated that unionization rates will continue to grow as employees seek equal representation in the labor force. Download Full Report Download the latest version of the Commercial Pulse Report here. Better yet, subscribe so you'll get it in your inbox every time it releases, or once a month as you choose.

What do credit unions, community financial institutions, retailers, B2B companies, and manufacturers all have in common? They are a vital part of the small business ecosystem—which highly impacts the US economy—and have the power to enable small businesses with better rates, terms, and credit options. The rapid rise of small business creation during the pandemic and beyond has proven to be a promising growth opportunity for firms that influence the small business ecosystem, especially if the firms can address the high volume of new business accounts applying for new lines of credit and credit terms online. Unfortunately, many of these firms are facing a difficult dilemma in updating their operations to run efficiently enough to automate their existing credit approval processes in a way that can serve business customers digitally and in a timely manner before customers look elsewhere. It’s a difficult scenario for smaller firms to handle operationally, and at a time when markets are fickle: How do firms invest in automating and updating their own operations, like credit approvals, with minimal resources and fast? Usually, it takes a lot of investment, time, resources, and agility to automate manual processes across organizations in a way that is secure and efficient. This scenario often gives larger competitor firms who have the resources to build automation in-house an advantage in addressing the market for small businesses. Break new ground with ‘out of the box’ small business lending: Introducing Experian’s RapidLendTM Small Business Bundle Firms can create ‘blue sky’, or more opportunities for small businesses by providing faster credit decisions and customer experiences. Break new ground within the small business space by leveraging ‘out of the box’ decisioning solutions, like Experian’s RapidLend Small Business Bundle. When combined with Experian’s vast, blended consumer and business data sets, firms can implement or improve their digital application workflow within 24 hours by deploying online credit forms to automate digital information capture and processing of small business credit applications. Experian’s RapidLend Small Business Bundle: Empowering small businesses and growth with automated decisions Smaller players who want to automate their small business credit process or bring on small business solutions channels for the first time can now easily implement web-based decisioning and application processing software called the RapidLend Small Business Bundle. The bundle is designed to render instant business credit approvals via a robust decision engine within a 24-window and with minimal technical lift required. This is a game changer for firms that are often squeezed for technical resources or investment but expected to deliver high-touch customer experiences from all aspects of their brand interactions, whether the interactions are with consumers or businesses. Now, digital applications can be processed instantly, and risk can be managed more efficiently within the RapidLend Small Business platform. The platform allows for credit scorecards and credit policy rules to be easily configured to automate credit decisions, actions, and credit limits. Bringing on a solution like the RapidLend Small Business bundle can also further enable strategies that help define and identify risk via simple API integrations within internal and third-party systems to promote added workflow automation that further reduces risk and human error. The platform delivers consistent and reliable decisioning results and allows users to print policy documentation on-demand. A path for firms to break into the small business space or stay competitive if they already have a presence It is an exciting time for firms that can take advantage of the opportunity to increase their activities within their small business channels or break into the small business channels by bringing on new products and solutions. By leveraging ‘out of the box’ solutions for automating the credit processes for small business accounts, firms can focus on what they do best and innovate in a way that fits their brand or business models without losing momentum. Solutions like Experian’s RapidLend Small Business bundle are just some of the many ways that Experian looks to grow market share for clients by empowering small businesses to thrive. Click the button below to watch a demo of the RapidLend Small Business bundle. Watch RapidLend Bundle Demo

The perception of economic conditions among small business owners grows more pessimistic with the NFIB optimism index still well below the 49-year average and a persistent belief that access to borrowing is likely to get worse. With inflation coming in at 3.7%, still stubbornly above the Fed’s 2% target, it is possible there will be more rate hikes in the coming months, which will make the cost of borrowing even higher. At the same time, small businesses are facing higher financing costs, the cost of labor continues to increase as workers can demand higher wages as employers struggle to find qualified workers for all their open positions. Meanwhile, there are still many signs pointing to a strong economy despite these challenges. Unemployment is still very low by historical standards as noticed by employers trying to fill open positions. Consumer spending continues to be strong with retail sales experiencing their sixth month-over-month gain in a row. As for credit tightening, both businesses and lenders report tightening but it may not be as bad it seems. Regular borrowing by small businesses on a monthto-month basis has recovered to pre-pandemic levels suggesting that even as borrowing costs are higher, small businesses still do have access to credit. New term loans are showing the average loan amount increasing and the number of new originations is only down 3% from the last quarter. Revolving accounts are faring less favorably but are also more likely to have variable interest rates that are sensitive to the increase in Fed rates. What I am watching: The Fed will have a difficult decision to make about interest rates at their next meeting on November 1 and in the coming months. Inflation has come down dramatically from its peak, but progress has stalled in the last few months. Unemployment is still very low and consumer spending is strong, but consumer and small business optimism is down. Housing costs are very high and high interest rates have slowed home sales as the cost to enter is high and existing homeowners are reluctant to sell. All these mixed signals make the path forward to achieve the coveted soft landing difficult to navigate and different Fed chairpersons have indicated different ideas on the matter. How the economy continues to fair in the coming holiday season and the response of the Fed to those conditions will be very closely followed as a result.

Fall 2023 Beyond the Trends report out now As we delve into the latter part of 2023, it's evident that the market is undergoing significant shifts, a few of which we touch on in this post. Be sure to download your copy of the latest Beyond the Trends report. We’ll summarize a few of the highlights that stood out to us as the aisles of holiday merchandise drop into shopping carts, and the holiday season kicks off across the country. A word from the report’s author: Holiday Shopping: A Season of Hope Amidst Economic Challenges The holiday season is always a crucial period for retailers, and this year is no exception. U.S. spending trends have shown a positive trajectory in the last two months of the quarter, indicating a potential surge in holiday shopping. Retailers are expecting a sales increase of 3.5% to 4.6%, amounting to a whopping $1.54 to $1.56 trillion. This optimism is further bolstered by the fact that consumers have been consistently spending, despite challenges like high interest rates and rising debt payments. However, it's not all rosy. Factors such as inflation, high gasoline and food prices, and costlier apparel are anticipated to dampen consumer spending. Factory Orders: A Cooling Trend Businesses, wary of an impending recession, have reduced their ordering and are relying more on their current stocks, especially for the holiday season. This trend has a cascading effect on related industries. For instance, the reduced need for warehouse space due to lower restocking and new orders has impacted the commercial construction sector. Furthermore, if consumers are buying fewer items due to high pricing, it means fewer units need to be shipped, directly affecting the transportation industry. Logistic costs have been on a decline for the past year, impacting both major trucking companies and independent transporters. Inventory: A Strategic Approach Amidst Uncertainty With the looming threat of a recession, businesses are taking a more strategic approach to their inventory. The trend indicates a reliance on current stocks rather than placing new orders. This cautious approach reflects the broader economic sentiment. Retailers, in particular, are keenly observing consumer behaviors and making forecasts on how many items to stock in their shopping carts for the holiday season. Credit Markets Tightening: A Sign of Caution There's a discernible focus on the tightening of credit markets. Consumer and commercial credit scores are witnessing the repercussions of increased leveraging and slower repayment behaviors.This tightening could potentially lead to a downsized holiday shopping list for many. For small businesses, this could translate to reduced consumer spending power, affecting their cashflows. Businesses that have been thriving in a bullish market might need to reconsider their strategies, especially as they might face challenges accessing credit markets or private funding in a cooling market. The Senior Loan Officer Opinion survey further underscores this trend, highlighting a growing inclination among lenders to tighten lending criteria. In closing: As we approach the end of 2023, the market is in a state of flux. While the holiday season brings hope for retailers, the broader economic indicators suggest caution. Businesses are strategizing to navigate these uncertain times, and the decisions they make now will have long-term implications. As consumers, businesses, and policymakers grapple with these challenges, one thing is clear: adaptability and resilience will be the keys to thriving in this ever-evolving landscape. Download Beyond the Trends Fall 2023 Report