As inflation persists as a major issue for the U.S. economy, small businesses are facing significant challenges.
The National Federation of Independent Businesses (NFIB) recently revealed that inflation remains the most pressing concern for small business owners.
Bill Dunkelberg, NFIB’s chief economist, explains, “Cost pressures remain the top issue for small business owners, including historically high levels of owners raising compensation to keep and attract employees.” He added, “Overall, small business owners remain historically very pessimistic as they navigate these challenges, dealing with rising levels of uncertainty.”
Despite a slight improvement in April’s figures, the NFIB reports that small business optimism has been below the 50-year average for 28 consecutive months. Approximately 22% of small business owners have pinpointed inflation as their biggest concern in running their businesses.
This ongoing economic strain is felt amid an atmosphere where inflation has only slightly slowed from its peak early in President Joe Biden’s term, yet remains stubbornly high.
The federal government’s latest figures from the Personal Consumption Expenditure and the Consumer Price Index rose by 0.3% and 0.4% respectively in March, indicating a persistent upward pressure on prices.
A Gallup poll conducted from April 1-22 found that American confidence in the economy is waning, marking the first decline in economic confidence in the past seven months.
This sentiment is in contrast to President Biden’s earlier assertions that inflation was at 9% when he took office, a significant misstatement from the actual figure of 1.4%.
Jack Pandol, spokesperson for the National Republican Congressional Committee, commented on the current administration’s approach: “President Joe Biden began the year confident that his lengthy war on inflation was nearing a desired end. But it hasn’t yet materialized, forcing him to adjust what he and his team thought would be a winning economic message for this election season.”
Former President Donald Trump has reiterated the Republican critique during his campaign, telling attendees at a New Jersey rally of the “Biden inflation nightmare.”
President Biden has maintained that price levels are decreasing, seemingly alluding to the deceleration of inflation’s rise. Nevertheless, prices have surged nearly 20% since his tenure began.
During a recent CNN interview, President Biden attributed the persistent high inflation rates to “corporate greed” and “shrinkflation.” He also stated that COVID-19 supply chain disruptions and geopolitical tensions, such as Russia’s invasion of Ukraine, have contributed to the economic turmoil.
However, Biden’s explanation has faced criticism from within his own party and from economists.
Prominent Democrats and economic analysts have pointed out that Biden’s $1.9 trillion stimulus law, passed in March 2021, has significantly fueled the current inflationary pressures.
Steven Rattner, a Democratic economist, labeled this law the “original sin” of the inflation crisis in a New York Times op-ed.
Small business owners continue to bear the brunt of these economic pressures.