Small businesses are increasingly concerned about the fate of the US economy as the nation copes with high inflation, a shortage of supply chain and labor, and rising interest rates.
According to a survey conducted this month by business coaching and partner consulting firm Vistage Worldwide Inc., 57% of small business owners predict that the US economy will deteriorate next year alone, according to the April low. 2020 confidence. Last month, 42% of small business owners had the same bleak outlook for the economy.
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The study, first reported by The Wall Street Journal, is part of a broader confidence index, which in May revealed its biggest annual decline since the COVID-19 blockade in the spring of 2020. Although prices continue to grow, the number of small businesses expecting revenue growth next year has fallen to 61%, a significant drop from the May 2020 level of 79%.
Evidence that small business owners have a pessimistic view of the economy relies on responses from a variety of sectors, including manufacturing and consumer products and services.
Even large corporations are feeling the effects of supply chain disruptions, rising prices and labor shortages.
Walmart reported an increase in sales in the last quarter, but noted that higher costs for products, employees and the supply chain hurt the company’s profits.
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Target’s profits were lower in its quarterly profits, published earlier this month, as inflation and supply chain costs limited profits.
Supply chains are also seeing indicators that consumers are starting to cut costs, especially for discretionary purchases, amid higher gas prices and other needs.
However, small businesses do not have the financial flexibility that larger companies have, so they often struggle to cope with economic problems. Many small business owners said their companies had suffered from the COVID-19 pandemic and a number of economic challenges. Government aid programs, which have helped ease the economic burden on business, have largely run out of money.
Yet few small businesses are still optimistic or neutral about the economy due to factors such as low unemployment, high consumer spending and demand for workers, which are at historic highs. The survey found that 12% of companies expect the economy to improve, while another 28% said they believe conditions will remain almost the same.
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Small businesses with less than 50 workers struggle when it comes to employment. These companies dropped out in February and April, while larger companies continue to add employees, according to ADP payroll data.
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A April Goldman Sachs survey found that nearly 88 percent of more than 1,100 small business owners surveyed said difficulties in hiring had worsened or remained the same since January. According to the survey, more than three-quarters of small business owners who report challenges in recruiting skilled workers say they find it difficult to compete with larger businesses in terms of pay and benefits.
The Wall Street Journal contributed to this report.