Small business owners lose optimism for growth amid inflation and political climate

Optimism among small business owners fell in December on fears of inflation and the economy slipping into recession, according to a survey released Tuesday by the National Federation of Independent Business.

The NFIB SME optimism index fell to 89.8 in December, the lowest level since June. It was the 12th straight month that the Business Lobby Index fell below his 49-year average of 98.

NFIB chief economist Bill Dunkelberg said in a statement: “Overall, small business owners are less optimistic about 2023, with sales and business conditions expected to deteriorate.” We are managing some economic uncertainty and persistent inflation and are continuing to make business and operational changes to compensate.”

Inflation is the most important factor facing businesses, according to 32% of small business owners, up from 22% a year ago. Inflation hit a 41-year high of 7.1% in November, down from his 9.1% in June, but still well above the Federal Reserve’s 2% target rate. Exceeded.

The political climate in the US was the second most common reason for not expanding, cited by 9% of small business owners.

Higher prices contributed to lower sales forecasts by small business owners over the next three months, reaching negative 10% in the survey, down 2 percentage points compared to November.

The Federal Reserve is imposing a series of rate hikes to keep inflation in check, pushing up borrowing costs for businesses and consumers.

Business prospects for small business owners over the next six months deteriorated by eight percentage points compared to November. Only 5% of small business owners say the next three months will be an “opportunity to expand their business,” a level that has barely changed in recent months.

Of small business entrepreneurs, 55% tried to hire employees in December, but 93% of that group reported few or no qualified candidates to fill the job.