We are back with the edition of the economic pulse combining an update for Feb & Mar.

In January, the biggest concern for most SMB owners was whether the Fed would cut rates three times or four. Today, that feels like a postcard from a different era. With the Strait of Hormuz effectively closed and the "Triple Threat" of energy, tariffs, and sticky inflation hitting all at once, the question has shifted from "How much will I grow?" to "How fast can I adapt?"

The economic landscape has shifted violently in the last 30 days. We are witnessing a rare convergence of geopolitical volatility and domestic policy shifts that are placing a premium on operational agility.

The conflict in Iran has removed nearly 20 million barrels per day of oil from the immediate global reach. This isn't just a "gas pump" problem; it is a "everything that moves" problem. When Brent crude sits above $113 per barrel, the cost of every plastic component, every delivery mile, and every ton of fertilizer climbs in tandem.

Simultaneously, the "Sleeper Crisis" tariffs has moved from a political talking point to a balance sheet predator. Small importers are now paying an average of $25,000 more per month in duties compared to a year ago. This isn't just a tax; it’s a direct drain on the working capital you usually use for payroll or expansion.

The data suggests a "low hire, low fire" paradox. While the unemployment rate ticked up to 4.4% in February, it wasn't due to mass layoffs, but rather a freezing of the market.

This month, we will get to the takeaways real fast. There isn’t a moment to waste on academic macroeconomic excursion this time around. Input costs especially energy, transportation, and food-related inputs are rising again. "I don't get any sense that inflation is decelerating. It feels like it's uncomfortably and persistently high," said Mark Zandi, chief economist at Moody's.

Watch the pricing play. If you haven't already adjusted prices in 2026, you'll likely need to. Customers are price-sensitive, but they also understand gas is $4/gallon. Communicate value, not just price increases. Bundle services. Add features. Don't just raise prices 5% across the board without giving customers a reason to stay.

Manage your margins tightly. Review supplier contracts. Negotiate where possible. Look for substitution opportunities. Energy efficiency investments pay back faster when diesel is $6/gallon.

Prudent cost management in anticipation of further rising oil price. Run your cash flow projections with a 40% increase in shipping and utility costs. If your "breakeven" vanishes, identify your "Tier 2" expenses for immediate deferment.

Planning like your business depends on it. You're not alone if you're feeling whipsawed. The problem isn't that the economy is collapsing, it's that nobody knows what's coming next. It is more difficult to plan when there is uncertainty regarding what costs will be, or how downstream impacts of policy changes will affect demand.

Fortune 100 companies have playbooks that come out of scenario plans. This can absolutely work well in SMBs. Model three versions for the year: optimistic, base case, and defensive. Identify the decisions that work across all three. Scenario planning is important now. No matter where we land in the next few quarters, you will have a path that might be appropriate for you to align with depending upon where we land.

Consider onboarding "Agents". With hiring practically frozen, focus on Operational Intelligence. Use Agentic AI tools to handle repetitive customer service and other back office manually intensive workloads. It is currently cheaper to "hire" an algorithm than to compete for scarce skilled labor. More work doesn’t need more labor. AI is getting better by the month. Consider breaking up the tasks done by your team, and identify relevant skills that are also repetitive and menial work to train AI agents to do that in conjunction with your existing team. The investment in agentifying parts of your business is likely to payoff sooner than you think if you think of “upskilling AI” (training AI) the way you would for a new employee. AI is like a very smart intern, quick to learn, but doesn’t show up at your business knowing how it runs. You have to teach it, and it learns well. And that too quick.

Negotiate Tariff Terms. If you are hit by the 25% upfront duty, ask your overseas suppliers for 60-day payment terms to offset the cash drain at the border.

Managing Debt. If you're carrying variable-rate debt, your rates aren't coming down. If you're planning a significant purchase: equipment, real estate, expansion, then factor in borrowing costs staying elevated through at least Q3 2026. Commercial lending rates have stabilized heading into 2026 after several years of increase, but "stabilized" doesn't mean "cheap." Expect 7-9% on commercial real estate loans, higher on equipment financing without SBA backing.

Refinancing opportunities remain limited. If you locked in low rates in 2020-2021, hold them as long as possible.

As we wrap up this edition of the pulse, consider asking this: If shipping and energy costs stay at this level for six months, or get worse, what is the fiscal year 2026 going to look like compared to the prior year. And which cost driver can you get a handle on, quickly.

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