Small Business Optimism Falls Amid Surging Inflation

April 22, 2022

U.S. small business owners were feeling less optimistic last month, as inflation, supply chain disruptions, and labor shortages weighed on sentiment.

The NFIB’s Small Business Optimism Index fell 2.4 points in March to 93.2. This is the third consecutive month where the index has been below its long-term average of 98. 

The proportion of business owners who expect business conditions to improve over the next six months fell 14 points to a net negative 49%, the lowest level in the survey’s 48-year history.

The most common concern for owners was surging inflation. Thirty-one percent of the respondents cited inflation as the single most important problem in their business, an increase of five points from February and the highest reading since 1981. Inflation has now replaced “labor quality” as the number one problem facing business owners.

It should come as no surprise that the number of business owners who are raising prices also increased, climbing 4 points from February to 72%, also the highest reading on record. 

While inflation may have overtaken labor issues as the biggest cause for concern, the survey also found persistent labor shortages. Forty-seven percent of owners reported job openings that they were not able to fill, and 49% reported raising wages, with another 28% planning to do so in the next three months.

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