It’s not just ‘average joe’ Americans whose sentiment is slumping (amid soaring inflation and lagging wage growth), the latest survey from the National Federation of Independent Business (NFIB), shows small businesses have never been more pessimistic about the outlook for business…
Owners expecting better business conditions over the next six months decreased one point to a net negative 38%, tied for the 48-year record low reading.
“As the end of the year nears, the outlook for business conditions is not encouraging to small business owners as lawmakers propose additional mandates and tax increases,” said NFIB Chief Economist Bill Dunkelberg.
“Owners are also pessimistic as many continue managing challenges like rampant inflation and supply chain disruptions that are impacting their businesses right now.”
This indicator has declined 18 points over the past four months…
Source: Bloomberg
The overall picture is mixed (four of the 10 Index components improved, four declined, and two were unchanged.):
A net 44% (seasonally adjusted) of owners reported raising compensation, unchanged from October and a 48-year record high reading. A net 32% plan to raise compensation in the next three months, also unchanged from October and a record high reading. Ten percent of owners cited labor costs as their top business problem and 29% said that labor quality was their top business problem.
Seasonally adjusted, a net 54% of owners plan price hikes, up three points from October and a 48-year record high reading.
Finally, there is a silver lining for small businesses… in the hiring side of things.
Forty-eight percent (seasonally adjusted) of all owners reported job openings they could not fill in the current period, down 1 point from October… it appears the tight labor markets are starting to free up…
Finally, NFIB’s Dunkelberg concludes that while the economy still has plenty of fuel to keep growing well into 2022, economic policies in 2022, however, will become even more uncertain as it is an election year and the issues are diverse and high energy politically; tax increases, regulations, spending, climate, social goals, and government appointments, to name a few.
Specifically of concern for small business owners is the current Build Back Better legislation which includes a significant tax increase for many. With a 50/50 Congress, anything can happen! And then there is Covid, which will continue to put its thumb on the scale of economic outcomes.
