Mood of small businesses in U. S. is falling
2023.01.10 07:36
Mood of small businesses in U. S. is falling
By Ray Johnson
Budrigannews.com – According to a survey released on Tuesday, small-business confidence in the United States fell to a six-month low in December. Additionally, business owners cited inflation and a lack of workers as major concerns.
The Small Business Optimism Index from the National Federation of Independent Businesses (NFIB) decreased by 2.1 points last month to 89.8, the lowest level since June, as fewer business owners anticipated improved business conditions over the next six months.
The index had fallen below the average of 98 over the previous 49 months for the 12th time in a row. From 43% in November, the net share of business owners anticipating improved business conditions decreased to -51% last month. As recently as June, it was -61%.
Inflation remained unchanged at 32 percent among owners, unchanged from November and 5 points lower than July’s reading, which was the highest since 1979’s fourth quarter. Overall, approximately 43% of owners reported raising average selling prices, which is the lowest level since May 2021 and down 8 points from November.
According to an economist survey conducted by Reuters, consumer prices are expected to remain unchanged from the previous month in December, with the smallest annual increase in inflation since October 2021.
Although price pressures appeared to be lessening as the year 2022 came to a close, officials at the Federal Reserve have yet to express their belief that the slowdown in inflation is sufficient to allow them to stop raising interest rates in the near future.
The Federal Reserve raised its policy rate last year from close to zero in March to a range of 4.25 percent to 4.5 percent, the most aggressive increase in interest rates since the 1980s. At its meeting on January 31-February 1, it is anticipated that the central bank will increase it by an additional quarter point. 1, with the intention of increasing it above 5% before taking a break.
The Fed and small businesses continue to be concerned about a tight labor market.
Fourty-one percent of business owners, down three points from November, said it was difficult to fill job openings. According to the NFIB, the transportation, manufacturing, and construction industries were experiencing the greatest difficulty in filling open positions.
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William Dunkelberg, chief economist for the NFIB, stated, “Overall, small business owners are not optimistic about 2023 as sales and business conditions are expected to deteriorate.” Owners continue to adjust their businesses and operations to cope with a number of economic uncertainties and persistent inflation.
