Small business owners
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Small business owners’ confidence in the future of their businesses and the economy hit a seven-year low, as reported by the National Federation of Independent Business (NFIB).
Significantly lower
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The small business optimism index dropped to 88.5, significantly lower than the long-term average of 98.
Decline
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Among the various aspects surveyed, the expectation of higher sales volume saw the biggest decline of 8 points, with a total of -18%, indicating widespread pessimism among owners regarding their businesses’ sales prospects.
Future earnings
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Although there was a slight uptick of 3 points in future earnings expectations among small businesses, the sentiment remained significantly negative at -36%, as reported by the NFIB.
Improvement
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The only other category showing improvement was earning trends, which rose by 2 points to -29%.
Inflation
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Around a quarter of small business owners identified inflation as their primary concern, marking a 2-percentage point increase from February, according to the NFIB.
Selling prices
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Additionally, a net of 28% of owners raised their average selling prices in response to escalating costs, a 7-point increase from the prior month.
Joe Biden
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Since President Joe Biden assumed office in January 2021, prices have surged by 18.5%, with a recent 3.2% year-over-year increase as of February.
Pressure
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This puts pressure on businesses grappling with escalating costs.
Federal funds
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In response to mounting inflation, the Federal Reserve has set its federal funds rate between 5.25% and 5.50%, the highest level in over two decades.
Borrowing costs
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This has led to increased borrowing costs for both businesses and consumers.
Labor quality
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In March, labor quality emerged as the primary concern for 18% of small business owners, a 2-point rise from the previous month, particularly affecting employers in the transportation, construction, and services sectors who faced challenges in filling job vacancies, as per the NFIB.
U.S. economy
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The U.S. economy added 303,000 nonfarm payroll jobs in March, surpassing the 275,000 jobs added in February.
