Washington DC — MetLife and the U.S. Chamber of Commerce Quarterly Small Business Index, released today, found that inflation concerns among small business owners have reached new highs.The vast majority (90%) of small businesses say they are concerned about the impact of inflation on their business, with 54% saying they are concerned Very concern, up from 31% in the first quarter.
Half of small businesses (50%) say inflation is the biggest challenge facing small businesses right now, marking the fifth straight quarter of increased inflation concerns. Seven in 10 (71%) believe the worst is yet to come for inflation.
“Small businesses have remained optimistic about the performance of their businesses in recent quarters,” said Tom Sullivan, vice president of small business policy at the U.S. Chamber of Commerce. “However, inflation does hit small businesses hard, and that reality is taking a toll on small businesses. Negatively affects their confidence, their ability to recruit, invest in the business and grow.”
Pessimism about the economy could lead to the biggest drop in the index score since the start of the pandemic, down from 66.8 to 62.1 in the second quarter. Additionally, small businesses say they now lack confidence in both the national and local economies and current cash flows.
Survey finds that 88% of small businesses are concerned that the U.S. will enter a recession next year, and 54% say they are concerned Very worried. A majority (59%) of small business owners rated the health of the U.S. economy as “somewhat poor” or “very poor,” up 10 percentage points from the previous quarter.
While two-thirds (66%) said they were satisfied with their current cash flow, this was down from 73% in the previous quarter, the first significant decline since April 2020. Also down slightly this quarter were the share of small businesses looking to increase their workforce (38%), and those forecasting an increase in revenue over the next year (61%).
Small business owner Tom Richter is seeing the impact of inflation at his Midville, Utah-based commercial cleaning services.
“Rising natural gas prices require us to increase prices across the board to our customers. The increase in raw materials has impacted the chemicals and equipment used in our business,” said Richter, principal owner of JAN-PRO in Utah. “Our franchise owners have had to increase the wages of their employees who do their day jobs.”
Among small business owners who said price increases had a significant impact on their business (83% of respondents), the majority cited the cost of goods and supplies (65%) and the cost of utilities or fuel (50%) as the most important factor they saw Most domain impact.
“The growing negative sentiment and concern among small business owners underscores the challenging economic environment they are currently facing,” said Cynthia Smith, senior vice president of regional operations at MetLife. “We’ve seen that even in the face of Small businesses can also remain resilient to adverse business conditions, and small business owners will need that perseverance as they face increasing economic uncertainty.”
More discoveries:
- when asked to choose Between lowering inflation or avoiding a recession, 59% said lowering inflation should be the top priority right now, while 41% said avoiding a recession was the top priority.
- In response to inflation, 7 in 10 small businesses Those who reported raising prices in response to inflationary pressures were followed by those who said they had taken out loans (40%), cut jobs (37%) or reduced the quality of their products or services (31%).
- 42% said the local economy is not doing well, For the first time since the first quarter of 2021, it surpassed the share deemed healthy (31%).
- Three-quarters of small businesses (76%) Say they have a plan to adapt to a changing economy. The majority (61%) believe the economy is changing faster today than in the past.
- 40% said they were Very worried On the impact of rising interest ratesbusiness (up 11 percentage points from Q1 2022).
- The majority (51%) say they have changed their supply chain Greater reliance on local suppliers over the past year suggests that small businesses may be shortening supply chains.
- Concerns about COVID-19 have subsided, That percentage fell to 13 percent from 23 percent this time last year as economic issues rose in importance.
About the Small Business Index
MetLife and the U.S. Chamber of Commerce Small Business Index Part of a multi-year partnership between MetLife and the U.S. Chamber of Commerce to elevate the voices of U.S. small business owners and highlight the vital role they play in the nation’s economy. The Quarterly Index is an online survey of 752 small business owners and policy makers designed to take the temperature of the industry and see where small business owners feel confident and where they face challenges.
The third quarter 2022 survey was conducted between July 21 and August 8, 2022. The survey’s confidence interval for all respondents is plus or minus 4.4 percentage points.
About the American Chamber of Commerce
The U.S. Chamber of Commerce is the world’s largest business organization, representing companies of all sizes in all sectors of the economy. Our members include small businesses and local chambers of commerce on America’s main streets, as well as leading trade associations and major corporations.
They all have one thing in common: They look to the U.S. Chamber of Commerce to be their voice in Washington, across the country and around the world. For more than 100 years, we’ve advocated for policies that support business, helping businesses create jobs and grow our economy.
About MetLife
MetLife, Inc. (NYSE: MET), through its subsidiaries and affiliates (“MetLife”), is one of the world’s leading financial services companies, providing insurance, annuities, employee benefits and asset management to help Its individual and institutional clients navigate a changing world. Founded in 1868, MetLife operates in more than 40 markets around the world, with leading positions in the United States, Japan, Latin America, Asia, Europe and the Middle East.For more information, please visit www.metlife.com.