Surging Inflation is the Number One Problem for Small Businesses
The National Federation of Independent Business (NFIB) Small Business Optimism Index fell 1.4 points in February to 95.7, marking the second consecutive month the index has been below the 48-year average of the index. Heightened concerns about inflation have become the number one problem for business owners. The proportion of businesses reporting they are raising average selling prices jumped 7 points to 68%, which is the largest share in the history of the NFIB series. While business owners have been able to pass along much of their higher costs, a growing share are becoming concerned that their ability to continue to do so will be limited by slower economic growth later this year. The share of business owners expecting conditions to improve over the next six months fell 2 points to -35% and is 16 percentage points lower than it was one year ago. Most of this deterioration is the result of growing concerns about inflation. The share of business owners citing inflation as their single most important problem has risen from 2% one year ago to 26% in February.
Small Business Owners Fear Being Overrun By Inflation
Small Business Optimism edged 1.4 points lower to 95.7, which marks the second month in a row the index has fallen below its 48-year average and its lowest level since January 2021. The NFIB survey provided one of the earliest warnings that inflation would likely prove to be a more widespread and persistent problem for the broader economy, with the share of firms reporting they were able to pass along their rising labor and input prices well before the Consumer Price Index began to ramp up. While small business owners have been able to pass along much of their higher costs, their ability to continue to do so will be limited by a slowing U.S. economy. Concerns about the economic outlook continue to mount, with the share of small business owners expecting economic conditions to improve over the next 6 months falling 2 points in February to -35%. In addition to heightened concerns about inflation, business owners remain frustrated by the inability to attract and retain the qualified workers they need. READ FULL ARTICLE>>