Small businesses more pessimistic than ever due to inflation

An index of small business confidence fell again in June as business owners fret about how high prices are cutting into their operating budgets.

The National Federation of Small Businesses, a trade association of small business owners, reported on Tuesday that its Small Business Optimism Index fell to 89.5 last month, making June the sixth straight month its reading has fallen under 98, the average of the 48-year-old survey.

"As inflation continues to dominate business decisions, small business owners’ expectations for better business conditions have reached a new low," NFIB chief economist Bill Dunkelberg said in a statement.

"On top of the immediate challenges facing small business owners including inflation and worker shortages, the outlook for economic policy is not encouraging either as policy talks have shifted to tax increases and more regulations."

34% of business owners surveyed said inflation was the single most important problem in operating their business, which NFIB notes is six points higher than last month and the highest level since 1980.

At its June meeting, the Federal Reserve raised the federal funds rate by 0.75% in an attempt to tame white-hot inflation. Chairman Jerome Powell said the Fed would continue to raise interest rates “as long as appropriate.”

The net percentage of owners who expect their businesses’ real sales to be higher than last month fell 13 points from May to 28%, which the NFIB called a “severe decline.”

The labor market was also a stressor for many owners, with half of those surveyed reporting job openings that could no be filled. A whopping 94% of those hiring or trying to hire reported few or no qualified applicants for their open positions.

The Labor Department reported last week that there were 11.3 million jobs open at the end of May, the tenth consecutive month the number has been over 10 million. The record before the pandemic began in Feb. 2020 was 7.7 million, reports Fox News.

Snarled supply chains continue to dog owners into June as COVID-19 has begun resurging in parts of the world. 39% reported that supply chain disruptions had a significant impact on their business.