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Confidence among U.S. small business owners is at an 11-year low, according to the NFIB.
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In addition to high inflation, employment problems and severe financial conditions are hurting businesses.
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Economist Mohamed El-Erian said this week that businesses' plight was indicative of a recession.
Confidence among U.S. small business owners fell to an 11-year low in March as inflationary pressures mounted and sales expectations slumped, according to the National Federation of Independent Business.
According to the NFIB's latest report, the Small Business Optimism Index fell to 88.5, the lowest level since December 2012. It has remained below the 50-year average of 98 for 27 consecutive months.
“Business owners continue to deal with a number of economic headwinds,” Bill Dunkelberg, chief economist at NFIB, said in a statement, adding that while inflation is once again a top concern for business owners, a tightening labor market is also a factor. He added that this continues to be a challenge.
Digging deeper, 25% of owners cited inflation as their biggest hurdle, up 2 points from February's survey. Additionally, the percentage of owners who said they were raising average prices jumped to 28%.
As the Federal Reserve keeps interest rates high to combat inflation and Wall Street adjusts expectations for a June rate cut, 8% of small business owners are feeling the pinch, having difficulty securing business loans. It states that it has become.
Despite the recent drop in the unemployment rate to 3.8%, 37% of employers report that their vacancies are unfilled, the same level as February and the lowest since January 2021. It became. The transport, construction and services sectors are grappling with major staffing challenges, the report shows.
Wall Street guru Mohamed El-Erian echoed the concerns of small business owners, seeing the decline in confidence as a sign of an impending slowdown in the U.S. economy.
“The big mistake people made in 2021 when they bought into the temporary theory was that they didn't listen to the companies. And the companies said, “Inflationary pressures are afoot, they have pricing power.'' , we've said very clearly that we're going to continue to do that.''We need to pass on the imported inflation that was coming in,'' he said in an interview with Bloomberg TV on Tuesday.
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