Bloomberg Audio Studios, Podcasts, radio News. You're listening to Bloomberg Business Week with Carol mess Here and Tim Steneveek on Bloomberg Radio. On the economic data front, we got data today that showed US labor costs jumped the most in a year as productivity gains slowed, adding risks to inflation that it's going to remain elevated. It comes after the loud and clear message from Jay Powell yesterday that rates will indeed be higher for longer. What do things look
like though, on the ground for America's businesses? Tell us answer that question. We've got back with us Sharon Miller, President of Business Banking over at Bank of America. The bank out with an update to its annual Business Owner Report. It's a survey of fourteen hundred at business owners, including businesses of one hundred thousand dollars through up to fifty
million dollars in revenue. Sharon, welcome back. Taking a look at the report, I got to tell you, certainly there's some concerns here inflation, geopolitics, but I got to tell you it looks like overall things are going pretty well for these business owners. They're optimistic they.
Are and thanks for having me back. I appreciate the time today. And we did find that as we surveyed clients that their revenue expectations, at least for the next twelve months, you know, sixty five percent of business owners told us that they expect their revenues to increase. So an overall optimistic tone coming from the small business community, I would say.
Is this pretty much across all industries. I'm not quite sure how you disin slice the data, I'm Sharon, but is it kind of everybody?
It is?
I mean, we hear from our clients and certainly we talk to clients every single day, and what we're hearing, you know, there are some concerns certainly, you know, the political environment. We're operating in inflation. I heard that as
we were leading up to this segment. But all in all, business owners, and especially smaller business owners, they really have control over their business in spite of what's going on around them, and so they have confidence that whatever the you know, economic environment is, they will over And so that's what we heard in the survey result and that's what we're hearing every single day across the desk.
Well, that's interesting because and listen. Sixty five percent business owners expect their revenues to grow this year. Fifty five percent report they've made more money in twenty twenty three than in twenty twenty two. Good numbers, strong percentages. But did seventy percent of business owners last time the survey was done expected, you know, the revenues to grow this year.
Give us like I'm always I'm always curious. I know tim is too in terms of trend lines and how this difference is maybe from the last data set, So is it improving? Is it the same?
It stayed steady, So it was steady from our last report twelve months ago, and so it's right in line. So we haven't seen a dramatic increase nor a big decrease. And I will tell you what's interesting as the segment from twenty to fifty million, so.
The mid size businesses, they.
Were eighty percent plus saying that their revenue was going to increase over the next twelve months, which to me, that is something that is very good for the economy. Normally we see the inverse where the smaller businesses are more optimistic versus the mid size and this time we saw exactly the opposite. I mean, they're both very optimistic.
But I would say the twenty to fifty million dollar businesses in the mid size category, we're eighty plus percent told us that, you know, I expect my revenue to increase over the next twelve months, and I expect to start accessing some capital, which we haven't seen quite as much of in that segment.
Okay, how are they going to access this capital? Because this is something we talk about all the time when it comes to private credit, when it comes to rates. What are you seeing as the source for capital for these businesses right now?
Well, I mean you have your traditional bank loans, lines of credit. Certainly we're seeing in the smaller segment where business owners are accessing credit cards, and you know, with that credit card, when we look at our data here at Bank of America, we see that it's on par with two thousand nine nineteen. We have seen an increase in the amount of credit card balances. But what I would say is when you adjust that for inflation, we're right on par with twenty nineteen. So I do feel go ahead.
Well just going anything concerning to you about that about the mix of financing right now?
No, I mean I feel that you know, we're in a very strong position with our clients, and certainly, you know, when you see that people are starting to access their lines of credit, they're feeling better. We've seen, you know, that that trend line be sort of stable, where we weren't seeing as much coming through in the mid sized segment.
And I do think that based on this survey and what we're hearing from clients, there's a tone of optimism out there that they're ready to get out there, they're ready to expand or you know, take on an acquisition, and certainly some activity going on in the business in business lands.
What color can you give us in terms of default rates on either their business credit cards, personal credit cards or anything that kind of ties back to it? Sounds like you sound very optimistic on many levels, So I'm just curious what are you seeing in terms of default rates or any signs of stress and for some of those.
Businesses, Yeah, I would say within within our portfolio at least.
I mean, we're very you know, we work with every.
Client and we certainly are very strong on our clients selection and making sure that it makes sense for the loan, and so we are at historically low levels on you know our credit losses, and so I do feel good about our portfolio and what's happening with the health of our business.
Again, I kind of go back to this idea that you know, the data in this are so good in this report, I was I was struck by that. But we do hear over and over again surveys of folks and look, this is limited. You're talking to business owners here about how how well things are going, but we hear from folks out there, especially ahead of the election,
that they are dissatisfied with parts of the economy. And I'm wondering if you can help explain, not politically or anything, but the disconnect between what you see in the survey and what you see in the other types of surveys. When you know voters are asked ahead of elections about how.
They're feeling, right, and I think you know even in this survey, and I've I've been in President of Small Business for seven years and we've been doing the survey before I even got your ten years in the making for this survey. So we've got a long track record of history and going through election cycles.
And what we find is that you'll see.
A dip in the in the confidence because of you know, what's happening in the political.
Landscape and that and the headlines.
But what happens following that election is that there's certainty and so there's you know, whether it's a Democrat or Republican doesn't really matter. There's certainty in what's going to happen going forward, and so you do see the economy start to move again. So you know, it's it's a typical cycle that we do see as we look back at our data, and you'll you know, it's it's it's kind of going through it again right now we're in
the election year. And so i'd also say that, you know, business owners where we surveyed are more optimistic about their own business and their revenue prospects versus the national or the local economy.
And so I think that has a lot to do with especially.
In the smaller businesses, they have control over their business in spite of what's going on around them. They can control their activity, they can control what they're doing, and they can tip it because they're small.
Sharon, what's the demographics the diversity of these statistics. I'm wondering if you can break it down, because BFA did a survey. I guess this was back in October. About forty four percent of black owners have had challenges accessing capital, according to a survey done by b of A last fall, with more than a third of those respondents saying they didn't have a relationship with a lender. Some thirty five percent said they don't think they will ever have equal
access to capital. And this is a story that Bloomberg has out today about, you know, after the pandemic, and they were so much entrepreneurial spirit and businesses, including black owned businesses, being created, and yet now here we are in twenty twenty three and just thirty two percent of black owners were fully approved for a loner line of credit compared to fifty six percent of white entrepreneurs. This was a March report from the twelve Regional Fed Bank.
So I'm just curious, what color can you give us in terms of the diversity or the demographics of some of this data.
Well, this business owner report was from all different demographics, and we do release a survey on women owned businesses, Black owned businesses, Hispanic owned businesses, So we do have other reports that follow this. One was very broad in nature and so we didn't dive into specific races or age demographics. This is across the board, and we do put out other surveys like that, and I'll tell you we find the same results in women owned businesses and
Hispanic owned businesses. And those are all the things that we are doing here at the bank to make sure that people understand how to access capital, how to have those conversations before you need capital, so that you can prepare and get ready.
So absolutely, those.
Are reports we put out and those are concerned that we want to address every single day.
Absolutely.
Sharon Miller, President of Business Banking at Bank of America, joining us from San Antonio, Texas.
Okay, this was news to me, Carol.
Yes.
Last year, GM decided it would ditch support for Apple's enfotainment hub Applecarplay, which by the way, you can get Bloomberg BusinessWeek from Applecarplay and Android Auto and it's new evs so it could bolster GM's in house platform, it's called Ultify. Perhaps not that surprising to those who followed consumer tech over the last decade or so. Doing something like that is easier said than done. Is the role
out of the new software has been well flawed. Austin kr and David Welch right about it in the forthcoming issue of BusinessWeek magazine. You can read it now on the Bloomberg and at Bloomberg dot com slash BusinessWeek. Austin is Bloomberg News technology reporter. He joins us from our Boston bureau. I gotta say, Austin, I had no idea that GM made this move until I read this, and my first reaction was, why would the company do something
like this? I mean, CarPlay is seamless. I think a lot of people would argue that it's really easy to use, and when it comes to consumer tech, I mean, I think it's fair to say that nobody really does it better than Apple. But then I started reading your story. It turns out that car companies give up a lot when they give up that dashboard space.
Yeah, I mean, that's totally right. In addition to being totally seamless, Apple car Play is also super popular, and you can imagine the more popular it grows, the more data, the more controls that Apple wants access to, the more unlikely it is that they're going to use GMS software to use GM's infotainment apps or to interact with their digital hub and how it controls the car or interacts with their EV batteries, and this became a sort of
a major concern for General motors in recent years, especially as Apple signaled that they want to expand with the next version of CarPlay into way more screens in the car to control everything from this phenometer to fuel levels to basically how you interact with the vehicle. And so GM basically decided last year that enough is enough. They wanted it not to be. They wanted to be a GM car, not an iPhone that you're driving, is one GEM executive put it to me.
So wait, how deep was Apple already going in terms of its access to information about our cars?
So right now, if you have CarPlay, if you get in a Ford or sort of any major automaker's car, it's a plug and play process. So they project it onto the screen. It's just sort of an overlay on top of the infotainment hub that you have in the vehicle already. So it's a version of the iPhone interface
that you have that's modified for a car. But Apple announced in mid twenty twenty two that it wants to branch out into a lot more features of the vehicle and regardless of whether it's tapping into those data sources or just syncing with them. It's essentially taking over the interface of the vehicle from not just the console center screen, but all the gauge clusters that you have behind the the steering wheel. So that's sort of what you know.
These car companies like GM consider miss mission critical components, and they were getting really wary of how deep that Apple was expressing its interest in reaching its tentacles into the car. And so that's why you see GM and Mercedes sort of dripped away from this.
Okay, so you say, Carol says, she gets it. At the same time, though, Austin, as you point out in your story, and look, you got to look at where the data is coming from. It turns out that, at least according to Apple, people take very seriously whether or not the car has Apple car Play when they're thinking about purchasing it.
Yeah, according to Apple's research, about seventy nine percent of US car buyers will only consider a car that's cart Play.
Compatible, again from Apple.
From Apple, but they also say, according to Apple's research, it's also ninety eight percent of all new new cars in the US come with car Play. So that's sort of an addiction. You cannot escape that habit forming just with you know, the few cars that are not CarPlay compatible, which is Tesla and Rivian, and that's about it. Every other car that's on the road that's new is CarPlay compatible.
And GM said, we're going to take that risk because we believe in our own software and we're going to invest in our own native platform to try to get people to use GM software rather than Apples.
Well, I mean, how does GM internals. I mean, obviously we know what Mary Barr and team feel like, but I mean, do they all think that this is the right move. That Apple can do things very well? And as you write about Michael Waldron who got a new Chevy Blazer, but he wasn't so happy about not having car Play.
Yeah, we talked to a bunch of the first car that's being rolled out with this new embedded software platform that's completely CarPlay free, is called the Chevy Blazer EV and it rolled out last year. We talked to a bunch of owners, including iPhone users, who tried to adopt adapt to this car, and they had a lot of trouble. In fact, the software and displays ran into so many glitches that a lot of these systems became rick. They
just blacked out altogether. They wouldn't work to turn on, apps, kept crashing, screens, kept flickering, to the point that GM actually had to issue a stop sale and a recall in late December to fix all these software. So far from a great rollout, not a very Apple like sort of onboarding process. But then again, some of the customers that we have talked to said, once they got used to it and sort of got over that habit and ripped the band aid, they actually kind of like GMS software.
And I can walk you through some of the seatures, but please do are upsides to those? Yeah? I mean, just as an example, so if you enter an address right now on the Chevy Blazer, because it's integrated with the hardware components in the car, which is something that Apple Car Play cannot do. So if I enter an address in this ev it can automatically predict battery capacity along their way of that route and suggest charging stations accordingly.
So if I'm I'm plotting a trip from from Boston to New York from where I am to you guys, it can suggest charging stations along the way automatically, whereas Applecarplay would have no idea what the battery life in your car is. So that's just one example of the type of embedded native software integration can sort of benefit consumers who just are used to getting a projection interface from Apple right now and not realizing there are better options out there.
When it works, Austin, when it works, yes, that is key. This is a great story, Austin. I couldn't put it down once I started reading it. Austin car Bloomberg News technology reporter joining us from our Boston bureau. Check out Austin Carr story. He wrote it along with David Welch in the forthcoming issue of BusinessWeek magazine. It's on the Bloomberg terminal. It's at Bloomberg dot com slash BusinessWeek