Optimism Meets Its Test: July CPI Lands as the Fed's September Call Hangs in the Balance

Key Trends

• Update: Beyond the hiring gauge last week’s brief covered, NFIB’s broader Small Business Optimism Index rose 2.4 points to 99.8 in July — its highest since August 2025 — with improved hiring plans driving most of the gain. But the Uncertainty Index rose too, to 91, and 27% of owners now cite labor quality or availability as their top problem, up 8 points from June.
• New business formation set a first-half record: 3.49 million applications were filed through June, up 14% year-over-year per Census Bureau Business Formation Statistics — the strongest January–June total on record, running counter to the softer labor-market backdrop.
• 61% of small business owners now actively use AI, up 3 points on the quarter, per San Francisco Fed research — but adoption skews sharply by firm age: 71% of businesses under 5 years old have adopted AI versus 45% of those over 20 years old.

Notable Businesses & Launches

• UPS rolled out new digital shipping tools for SMB customers, including a pickup-management dashboard, faster label creation, and a redesigned mobile app integrated with over 5,500 UPS Store locations for RFID-enabled tracking.
• Brazilian SMB fintech Conta Azul acquired accounting-automation platform Mister Contador, folding automated bookkeeping into its small-business finance suite as SMB software consolidation continues internationally.

Funding & Investment

• Small-business lender Forward Financing secured $525 million through a $350M variable funding note and a $175M asset-backed securitization, pushing its total funding capacity to nearly $700 million. The company has funded $5.2 billion to more than 97,000 small businesses since 2012.

• Italian SMB automation platform Webidoo raised a €21 million round to scale tools that automate incorporation, payments, and operations for small operators.

Regulatory & Economic Context

• The July CPI report lands today — Dow Jones consensus calls for 3.4% headline inflation, down from June’s 3.5%. It’s the data the Fed will weigh most before September: odds of a September rate hike fell from roughly 57% to 44% after last week’s jobs miss, with odds of a hold climbing near 60% — a hotter-than-expected CPI print could revive hike bets.

• The SBA’s rule doubling the combined 7(a)/504 loan limit to $10 million took effect July 4, the highest cumulative SBA financing ceiling in the agency’s history — aimed at capital-intensive operators like manufacturers and logistics firms.
• Update: On the Section 338 tariffs against Canada taking effect August 19, litigation is now expected at the U.S. Court of International Trade challenging whether the century-old statute was superseded in 1962. Energy, potash, fish, critical minerals, and goods already under Section 232 tariffs are confirmed exempt — the first carve-outs since the policy was announced.

Takeaway