Most small businesses in the US are worried that a recession is coming

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About 93 percent of small business owners worry that the United States will enter a recession in the next six months, a survey released by Goldman Sachs showed on Wednesday, with a majority of firms saying the country is headed in the wrong direction.

In the same survey a year ago, with increased vaccinations promising an end to the COVID-19 pandemic, businesses were more optimistic and 67% said the United States was moving in the right direction. That reversed in the latest release, with 61 percent of responding businesses saying the United States is on the wrong track.

About 78 percent of small business owners say the economy has gotten worse in the past three months, with only 5 percent saying it has gotten better. Over the same period, 84% say hiring challenges have worsened and 80% say inflationary pressures have increased.

This quarterly survey is the first time the recession question has come up. It found that 6% of respondents were not worried about a recession at all, while 1% said they did not know.

Supply chain issues have worsened for 38% of respondents over the past three months, while 40% say such issues have remained the same.

Among the survey’s “most troubling data” is that 38 percent of small businesses say they’re seeing a drop in customer demand as a result of price increases for goods and services, said Joe Wall, who leads advocacy efforts for 10 Goldman’s 000 Small Business Training Program.

The results will help inform discussions at the program’s summit in Washington next week, where more than 2,500 small business owners are expected to meet with more than 400 government officials.

FOCUS ON COSTS

Jill Bommarito, founder and owner of Ethel’s Baking Co near Detroit, is struggling to keep up with rising costs at her 30-employee business, which makes gluten-free dessert bars sold at Whole Foods and other grocery chains.

Oil prices have more than doubled, her wages have increased by 30%, packaging and shipping costs have soared and she now has to carry twice as much stock of ingredients to avoid production disruptions, which “eats money she told Reuters.

“We have issues with COVID, labor, inflation, supply chain, but the biggest thing right now is that we feel like we’re heading into a recession,” said Bommarito, who started Ethel’s in 2011 and is a member of the Goldman program .

“I haven’t had a conversation with another small business owner in the last two weeks that that wasn’t the biggest topic — like, how are we going to sustain this?” she said.

Her plan is to “micro-manage” costs, conduct daily risk assessments, carefully select customer relationships to avoid over-expansion and diversify the cookie product line.

Despite the bleaker outlook for macroeconomic challenges, 65% of business owners in the country said they remain optimistic about the outlook for their own business, and 65% said they are currently hiring full- or part-time employees.

The survey is based on responses from 1,533 participants in the Goldman Sachs 10,000 Small Businesses, conducted by Babson College and David Binder Research from June 20-23.

Among the changes the companies are seeking is the reauthorization and modernization of the Small Business Administration, the federal agency that supports companies with loan guarantees and technical advice, a step that hasn’t been taken in 20 years.

Bommarito said changes are needed to streamline the process for banks to approve SBA loans to make small business lending “more attractive” to banks.

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Commercial Lines Business Insurance in the US

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