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Utah economy

Inflation worries hit new high for small business owners

washington d.c. — MetLife Quarterly and the U.S. Chamber of Commerce Small Business Index, released today, revealed that inflation concern among small business owners has reached a new high. The vast majority (90%) of small businesses say they are concerned about the impact of inflation on their business, with 54% saying they are very concerned, compared to only 31% in Q1.

Half of small businesses (50%) say inflation is the biggest challenge facing small businesses right now, marking the fifth straight quarter of growing concern about inflation. Seven in ten (71%) think the worst is yet to come when it comes to inflation.

“Over the past few quarters, small businesses have been optimistic, but they still feel good about where their business is going,” said Tom Sullivan, vice president of small business policy at the US Chamber of Commerce. United. “However, inflation is hitting small businesses really hard, and that reality is having a negative impact on their confidence, their ability to hire, invest in their businesses, and grow.”

Heightened pessimism about the economy likely contributed to the biggest drop in the index score since the start of the pandemic to 62.1, from 66.8 in the second quarter. Additionally, small businesses say they now have less confidence in the national economy and in their local economy, and in their current cash flow.

The survey found that 88% of small businesses fear the United States will enter an economic downturn next year, with 54% saying they are very concerned. The majority (59%) of small business owners think the U.S. economy is in “fairly bad” or “very bad” health, up 10 percentage points from last quarter.

While two in three (66%) say they are comfortable with their current cash flow, it fell from 73% last quarter, the first significant drop since April 2020. The percentage of small businesses planning to increase their workforce also fell slightly this quarter. (38%) and those who predict an increase in income next year (61%).

Small business owner Tom Richter has seen the impact of inflation at his Midvale, Utah-based commercial cleaning services business.

“Gas increases have forced us to raise prices across the board for customers. The increase in raw materials has impacted the chemicals and equipment used in our business,” says Richter, principal owner of JAN-PRO of Utah. “Our franchisees have had to raise the salaries of their employees doing the day-to-day work.”

Among small business owners who say rising prices have had a significant impact on their business (83% of respondents), most cite the cost of goods and supplies (65%) and utilities or fuel ( 50%) as the items they viewed the most. impact.

“The growing negative sentiment and concerns among small business owners underscores the challenging economic environment in which they currently operate,” said Cynthia Smith, senior vice president, Regional Business at MetLife. “We’ve seen how resilient small businesses can be, even in the face of adverse business conditions, and that kind of courage will be required of small business owners as they face increasing economic uncertainty.”

More discoveries:

  • When asked to choose between reducing inflation or avoiding an economic slowdown, 59% think that the current priority should be to reduce inflation and 41% make it a priority to avoid an economic slowdown.
  • To cope with inflation, 7 out of 10 small businesses say they are raising prices in response to inflationary pressures, followed by those who say they have taken out a loan (40%), reduced their staff (37%) or reduced the quality of their products or services (31%).
  • 42% say their local economy is in poor health, exceeding the share who say they are in good health (31%) for the first time since the first quarter of 2021.
  • 3 out of 4 small businesses (76%) say they have a plan to adapt to a changing economy. The majority (61%) think the economy is changing faster today than it has in the past.
  • 40% say they are very concerned on the impact of rising interest rateson their activity (+11 percentage points compared to Q1 2022).
  • A majority (51%) say they have changed their supply chains to rely more on local suppliers over the past year, a sign that small businesses may be shortening their supply chains.
  • Concerns about COVID-19 have faded, 13%, compared to 23% at the same time last year, as economic issues gain in importance.

About the Small Business Index

The MetLife and the American Chamber of Commerce Small Business Index is part of a multi-year collaboration between MetLife and the U.S. Chamber to elevate the voices of America’s small business owners and highlight the important role they play in the national economy. The quarterly index, an online survey of 752 small business owners and decision makers, is designed to take the temperature of the industry, see where small business owners are confident and where they are struggling.

The survey for the third quarter of 2022 was conducted between July 21 and August 8, 2022. The survey has a credibility interval of plus or minus 4.4 percentage points for all respondents.

About the United States Chamber of Commerce

The United States Chamber of Commerce is the world’s largest business organization representing businesses of all sizes in all sectors of the economy. Our members range from small businesses and local chambers of commerce that line America’s main streets to major industry associations and large corporations.

They all share one thing: they look to the United States House to be their voice in Washington, across the country, and around the world. For more than 100 years, we’ve advocated for business-friendly policies that help 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 their changing world. Founded in 1868, MetLife is present in more than 40 markets worldwide and holds leading positions in the United States, Japan, Latin America, Asia, Europe and the Middle East. For more information, visit www.metlife.com.

Mary Cashion

The author Mary Cashion