- 00:00Let’s talk about the change in sentiment since the election. Are you seeing the same thing? Are you seeing a big bounce? We are seeing optimism out there, and I think we’ve seen it this over the past few years. So. But I do see as we come to the end of this year, business owner optimism has increased and we are seeing capital expenditures, people thinking about the future and what that can hold for their business in 2025 and beyond. So you’re not just seeing a change in feelings, you’re seeing a change in behavior. They’re actually starting to make those decisions. You see the activity already. We are seeing activity and we’re seeing loan growth picking up. We’re seeing lines of credit utilization uptick. And so that is a good sign for what’s happening in the business sector. So we handle clients from, you know, start up all the way to 50 million in revenues. And so from small to midsize, we are seeing an uptick in activity. One of the fascinating aspects of the recent report that you put out is that the biggest risk isn’t necessarily weakness from consumers, it’s necessarily weakness and ability to sell. It is the potential for inflation to be stickier, to eat into margins. How much was that a surprise to you at a time when we keep talking about the disinflationary trend that everyone’s expecting into next year? Well, it’s not a surprise because inflation has been sticky. And as you think about business owners, particularly in the there rental space, so where they’re doing business there, that has increased significantly. And so as you think about even retailers, they’re paying 30% more on average just because they want to get a good spot so that people see them, they’re visible and those rents have come up a lot. And so that has been on the minds of business owners, not just this year, but but we have seen it more pronounced. That raises this question of the vulnerability. If there is some sort of increase in tariffs, particularly for smaller businesses that might have more difficulty than larger ones negotiating more better terms, etc.. How much was that something that you talked about with them that you’re hearing more from your clients about how to maneuver in an inflationary environment where there still are opportunities? Well, we’re not sure exactly how that’s all going to play out, and it will determine, you know, how the health of the business is at the time, once these tariffs, if they do go into effect. But, you know, it depends. Are they going to keep it themselves? Is the health of the businesses strong or are they going to pass that along to the consumer? So that could have some inflationary impact as well when it comes to these small businesses, whether it’s goods or services, who’s feeling more optimistic? I would say the services sector, we are seeing, you know, services, we’re seeing an uptick in lodging travel experiences, which is also what we see in our consumer data. So people are spending on memories. How do they take trips and what are they doing that they can, you know, continue to do. So we see that into the business segment. We’re seeing an uptick in not only, you know, travel and lodging, but also in other services. So professional services, finance, you are seeing an uptick in those businesses. You say inflation remains a top concern, but even for small businesses, but even with inflation potentially lingering as this concern. Do you see any appetite for consumers to slow down? You know, we have seen a very steady consumer. And so as we look at our data through the Consumer Reports, we have, we see that their balances are 30% higher than 2019. And so we continue to see strength in the consumer, in all cohorts. And they are spending and we’ve seen an uptick in holiday spending going into the holiday season. And so, you know, it’s there’s still strength there and still some dry powder. You talked about how there is a willingness and ability to increase leverage and you are seeing more borrowing even though there is a bit of credit card debt already outstanding for some of these small businesses. Can you talk about how different that is than, say, a couple of years ago when maybe the scars of the pandemic were hanging over businesses and they weren’t as willing to borrow? How much do you expect borrowing to really increase? Well, we are seeing increased demand. And and as you think about the balances on card, we do see an uptick. And that’s not only due to the inflationary pressure that’s happened over the past year, but also capital expenditures. And so we are seeing that pull through and and we have a strong business economy. When you think about the credit and clients that are out there in the communities really rebuilding, can they handle interest rates where they are? Because we get conflicting reports about that. What do you see? They are handling the interest rates where they are. And again, we are seeing today we’ll have another decision on and we expect another 25 basis point decrease in the in the inflation in the rate. And so, you know, it will it will help as rates come down. I think it will be easier for consumers as well as businesses to to, you know, pick it up on any stretch. At the moment. I think that’s important. We are not.
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