Small businesses are worried about the fate of the U.S. economy as the nation deals with high inflation, supply-chain and labor shortages, and rising interest rates.
According to a survey conducted by business-coaching and peer-advisory firm Vistage Worldwide Inc., 57% of small business owners predict that the U.S. economy will only get worse in the next year, matching the April 2020 mark for the lowest level of confidence. 42% of small business owners had the same grim outlook on the economy last month.
The Wall Street Journal first reported on the poll, which revealed its largest year-over-year drop since the COVID 19 lockdown from spring 2020. While prices continue to rise, the number of small businesses that expect a revenue increase in the coming year fell to 61%, a significant decline from the May 2020 level of 79%.
The data shows that small business owners have a pessimistic view of the economy, based on responses from a variety of sectors, including manufacturing and consumer products and services.
Supply-chain holdups, rising prices and worker shortages are some of the biggest corporations that are feeling the impact of these.
Walmart reported a sales increase in the last quarter, but noted that the higher costs for products, employees and the supply chain hurt the company's profits.
Inflation and supply-chain costs limited profits, Target's profits fell as it released its quarterly earnings earlier this month.
There are indications that consumers are starting to cut down on spending, particularly for discretionary purchases, due to higher prices for gas and other necessities.
Small businesses don't have the financial flexibility that larger businesses do, so they struggle to manage economic woes. Many small business owners have said their companies have been hurt by the COVID-19 pandemic and by a number of economic challenges. The government aid programs that helped alleviate the economic burden for businesses have run out of funds.
Many small businesses are still optimistic or neutral about the economy because of factors such as low unemployment, strong consumer spending and demand for workers sitting at historic highs. The survey found that 12% of businesses think the economy will improve and another 28% believe that the conditions will stay the same.
Small businesses with less than 50 workers are struggling when it comes to employment numbers. These firms suffered drop-offs in February and April while larger businesses continue to add employees, according to payroll data from the ADP.
In April, a survey by Goldman Sachs found that nearly 88% of more than 1,100 small business owners said difficulties in hiring workers had worsened or remained the same since January. More than three-quarters of small business owners who have difficulty recruiting qualified workers said they are having a hard time competing with larger businesses on pay and benefits, according to the survey.