The US economy is rolling along but with it consumer debt is rising, credit card delinquencies are rising, and student loan debt according to Forbes has reached $1.5 trillion on which the delinquency rate is now 11.4%.  That’s $165,000,000 that is not going to be spent into the economy.  An unpaid student loan debt totally precludes a small business owner from any conventional financing including SBA loans because it shows on your credit report.  Rising consumer and student loan debt is beginning to cause banks to raise interest on some loans as well as credit cards.  Credit card delinquency rates in the first quarter hit the highest level since 2012.  This and rising student loan debt is especially prevalent among the Millennials.  Being saddled with high student loan debt is causing some younger people to have to postpone buying decisions – such as a house, with all the related spending that goes with it. 

Does all this mean anything for your business?  It may mean nothing depending on your product or service.  But if you have to buy from a supplier or manufacturer, does anything in that product come from China?  For just one example, depending on whatever happens in the tariff/trade war with China, your supplier’s costs may go up which they will pass along to you which you will probably have to pass on to your customers.  Will that make some of your customers decide not to buy at the higher price?  On the flip side, you may have a good product that was cheaper than the product that consumers were willing to buy before, but if the price on that product goes too high, the consumers may opt for a less costly version of the same product – yours perhaps.

Whatever happens it’s becoming more and more of a good time to look backward at your supply chain and forward to the types of customers purchasing your product to see how interest rate-sensitive they might be, what their ages are and anything else.  It’s prevailing wisdom to know your customer.  It may be a good time to take a closer look both ways.

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