Small Business Checkpoint: In good shape and handling hurdles

Small businesses stayed steady despite headwinds in 2023, though high inflation could continue to pressure profits in 2024.

Headshot of Taylor Bowley

Taylor Bowley

Headshot of David Tinsley

David Tinsley

January 2024

Key takeaways

  • Small businesses displayed resilience in 2023, and were an important driver of the overall buoyancy in the U.S. labor market. Bank of America internal data shows monthly payroll payments per small business client rose year-over-year (YoY) for most of 2023.
  • Payroll growth, however, moderated significantly compared to the peak in March 2022. This moderation could indicate more "sustainable" growth going forward, as we think this primarily reflects slowing wage growth especially in high-touch sectors like leisure and healthcare that were more strongly impacted by persistent labor problems during that period.
  • Small business resilience will likely continue to be tested in 2024. Bank of America internal data shows December 2023 had the second lowest inflow-to-outflow ratio for small businesses' checking and savings accounts across the last five Decembers, highlighting pressure on small firms' profits.

Read our full analysis for a more in-depth look at these trends.

Small Business Checkpoint is a regular publication from Bank of America Institute. It aims to provide a real-time assessment of small business spending activities and financial well-being, leveraging the depth and breadth of Bank of America’s proprietary data. Such data is not intended to be reflective or indicative of, and should not be relied upon as, the results of operations, financial condition or performance of Bank of America.