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Time for D.C. to reverse course on interest rates
Guest columnist

Chris Clark


It’s no surprise to anyone who has filled up their tank, been to the grocery store, or applied for a loan that sky-high inflation and increasing interest rates are placing an undue financial burden on citizens across the country and constraints on business investments.

Here in Georgia, Governor Brian Kemp suspended the gas tax for months and put money back in the pockets of hardworking taxpayers among other fiscal decisions that have helped ease the burden on Peach State families. However, at the end of the day, inflation and interest rates are D.C. problems that place an artificial cap on an otherwise healthy economy.

In addition to facing the challenges of inflation, young Georgians are finding it nearly impossible to afford their critical first homes because of increasing mortgage rates. Nationally, home purchases are down by over 14% since October of last year, and monthly payments on housing units have sky-rocketed by 53% from Q1 of 2022 to Q1 of 2023 alone. Interest rates between 6% and 7% coupled with the drastic decrease in new builds have forced many empty nesters to stay in homes they don’t need further limiting the available housing stock for first-time home buyers and making it even harder for them to afford their first home.

The Georgia Chamber has supported legislation at the state level to increase the availability of housing and decrease barriers for homebuilders, but further action to reduce interest rates and housing costs is needed at the federal level. Housing affordability isn’t the only problem.

Georgia has the second-highest loan rates for both new and used vehicles in the country at 7.91% and 12.15% respectively. Transportation is a key reason many people aren’t working today, and these rates are making the problem worse! While these issues are impacting Georgia’s families in a very real way, small businesses throughout the state are also struggling under the current economic conditions. In a recent survey, only 29% of small business owners said that their companies could afford to take out a loan with small business loan rates sitting between 7% and 9%. Many of these Main Street businesses already operate week to week, so it’s easy to see how even a small uptick in interest rates could ripple through their profit margins. In the same survey, 85% of respondents noted that if access to capital continues to tighten it will dramatically impact their growth by forcing them to halt expansion plans, implement hiring freezes, lay off workers, or close their doors altogether. These businesses are the heartbeat of our communities and deserve better!

Instead of decreasing barriers for small businesses to access loans, federal regulators chose to do the exact opposite.

In July 2023, the Basel III Endgame Rule was proposed which would require large banks and most regional banks to increase their capital holdings by 20%. This rule will significantly reduce access to capital for Georgia’s small businesses, households, and consumers by forcing banks to offer less financing or offer it at a much higher cost.

At the same time, Washington’s inaction on tax policy means many small businesses will be paying higher tax bills in 2025.

The Georgia Chamber, on behalf of the business community in every single county in the state, is taking a stand for small businesses, our employees, and communities by urging Washington lawmakers to address poorly conceived policy in the financial markets, and to pass much-needed tax break extensions. We also call on the Federal Reserve to take immediate action to reduce interest rates and remove the constraints hindering economic growth and prosperity. Homeownership matters. Small businesses matter. The auto industry and manufacturing matter. It’s time for Washington to act like it!

Chris Clark is the president and CEO of the Georgia Chamber of Commerce.

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