A recent survey reveals that small business owners are not optimistic about the challenges facing them in the new year.
Key Details
- Reports from the National Federation of Independent Business (NFIB) found that optimism in the small business world continues to be below the 49-year average.
- Overall optimism of those surveyed declined in December and was at the lowest point since June. The survey also found that business owners do not expect market conditions to be any better in the next six months.
- December marks the 12th consecutive time optimism has declined.
- Inflation is the main reason for the decreased optimism.
Why it’s news
Over the last year, the Federal Reserve has drastically increased interest rates in an effort to curb rapidly growing inflation. While this approach is beginning to have an effect, higher interest rates mean more difficulties for small business owners—especially if they are in need of a loan.
“Overall, small business owners are not optimistic about 2023 as sales and business conditions are expected to deteriorate. Owners are managing several economic uncertainties and persistent inflation and they continue to make business and operational changes to compensate,” NFIB Chief Economist Bill Dunkelberg says.
Inflation has started to decline somewhat, but the average rate was still 6.5% in December—far above the Fed’s target rate of 2%.
In addition to higher costs for small businesses, the survey found that fewer businesses have been able to increase the prices on their goods. Fewer businesses plan to raise their prices in the near future.
NFIB’s survey also found that business owners are frustrated with an inability to hire the right people for the job. More than half reported that they had hired or tried to hire additional staff in the last month, but nearly all said that there were little to no qualified applicants available.
In addition to the NFIB’s survey, the U.S. Chamber of Commerce Small Business Index also reported that inflation was one of the main concerns among small business owners.