Pasadena’s small and midsize businesses are entering the second half of 2026 under continued pressure from inflation, higher operating costs and uncertainty about consumer spending, according to Paul Little, president and chief executive officer of the Pasadena Chamber of Commerce and Civic Association.
Little said in written responses to questions from Pasadena Now that business conditions are “about the same, or maybe a bit more challenging” than they were at the start of the year, with inflation and gasoline prices affecting both the cost of goods and services and the cost of doing business.
“This has been a rough year,” Little said at the halfway point.
Little said some sectors, particularly restaurants and discretionary retail, are seeing fewer customers or customers who are spending less. He said uncertainty about future costs is making it difficult for businesses to plan, especially small businesses without strong working capital to absorb temporary gaps.
“Business people like to know what things will cost into the future,” Little said. “Right now, that is anything but certain.”
Asked what cost pressures Pasadena Chamber members are reporting, Little said businesses are facing significant increases across several categories, including utilities, rent, employee costs and supplies.
“All of the above,” Little said when asked whether wages, rent, insurance, utilities, supplies, borrowing costs, city fees or other expenses were weighing most heavily on businesses.
The pressure comes as Pasadena’s local minimum wage is scheduled to rise July 1 from $18.04 to $18.57 an hour for most employers. Little said increases in the minimum wage tend to push other labor costs higher because employees earning more than minimum wage also expect increases.
Little said the roughly 50-cent hourly increase may appear small on a per-employee basis, but can become substantial for businesses with multiple workers. He said the increase amounts to about $20 per week for a full-time employee, or about $200 per week for a business with 10 employees.
“That $10,400 per year could be the difference between staying open or closing the doors,” Little said.
Little said employers have limited options to absorb the higher costs, especially after already reducing expenses in response to previous cost increases. He said some businesses may respond by cutting hours or raising prices.
“The employer has few options to cover the increases, either give workers fewer hours or increase prices,” Little said.
Little said higher household costs also appear to be affecting consumer behavior. While some business owners have reported little change in overall business volume, Little said many others are seeing fewer customers and lower spending per customer.
He said the trend is especially visible among restaurants and retailers, where purchases are often more discretionary.
“People are paying more for electricity, gas and groceries, so they cut back on those discretionary expenditures,” Little said.
Despite those challenges, Little said Pasadena business owners generally remain cautious rather than pessimistic as they look toward the second half of the year.
“Business owners tend to be cautiously optimistic all the time,” Little said. “They look at the long view of things and hope conditions will improve.”
Little said many local business owners remain deeply committed to their enterprises despite difficult conditions.
“These are people who put their heart and soul into an enterprise and work very hard to succeed,” Little said.
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