Jim Friedman, chairman of Intrepid Investment Bankers, talks on “The Craman Countdown” about how lower interest rates can help small businesses struggling with debt and equity growth.
Small and medium-sized enterprises continue to have a pessimistic view of the current economic situation. us economy It was announced in December, reflecting concerns about persistent labor shortages and chronic inflation.
The National Federation of Independent Businesses (NFIB) is a Tennessee-based organization. small business ownersaid its Small Business Optimism Index rose slightly last month to 91.9, down 1.3 points from November. Despite the increase, the reading has remained below the 48-year average of 98 for 24 straight months.
“Small business owners remain extremely pessimistic about the economic outlook for this year,” said Bill Dunkelberg, chief economist at NFIB. “Inflation and labor quality have consistently been difficult issues for small business owners, and they are not convinced that the situation will improve in 2024.”
Increase in credit card debt by small businesses
A closed sign is posted on the door of a small business in Queens, New York. (Lindsay Nicholson/UCG/Universal Images Group via Getty Images/Getty Images)
exceeded inflation quality of workers This was the biggest threat to small businesses in December. Approximately 23% of small business owners cited rising prices as the most important issue in their business operations, an increase of 1 percentage point from last month.
Inflation has fallen significantly from its peak of 9.1%, but remains well above the Federal Reserve's 2% target. As a result, more than a third of small business owners (about 36%) reported raising prices to offset the pain of high inflation. Only 15% reported a lower average selling price.
As high inflation weighs down Americans, 401(K) withdrawals from those in need surge.
An additional 20% of business owners believe that the quality of labor is at its peak because low unemployment rates and rapid wage increases make it difficult for owners of these businesses to compete with larger companies and hire employees. said that it was a problem. About 36% of small business workers reported increasing their compensation in the last month, and 29% plan to increase their pay in the next three months.
A customer looks at products at a store in Miami on March 14, 2023. (Photo by Joe Radle/Getty Images/Getty Images)
Approximately 9% of owners cited labor costs as their biggest operational issue.
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The NFIB survey came just two days before the release of a new consumer price index that is expected to indicate the persistence of inflation. Economists polled by Refinitiv expect inflation to rise 0.2% month-on-month and 3.3% year-on-year.
More worryingly, economists expect core inflation (which excludes more volatile food and energy measures) to rise 0.2% in the month and 3.8% year-on-year.
