American small businesses, which account for over 40% of the U.S. economy, are getting hit with a double whammy: inflation is running wild and they’re having trouble hiring.
“Inflation continues to be a problem on Main Street, leading more owners to raise selling prices again in February,” said National Federation of Independent Businesses chief economist Bill Dunkelberg in the group’s February survey “Small Business Economic Trends,” which was released Tuesday. “Supply chain disruptions and labor shortages also remain problems, leading to lower earnings and sales for many.”
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Twenty-six percent of owners reported that inflation was their single most important problem encountered in operating their business, an increase of 4 points from December and the highest reading since 1981.
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As a result, 68% of owners plan to raise prices, the most on record or since 1973 when tracking began.
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Inflation, which remains at record levels for consumer and producer prices, is showing no signs of letting up with oil touching $130 per barrel Monday before easing, while gas prices soared to a fresh record of $4.17 per gallon on Tuesday.
On Thursday, the Consumer Price Index for February is expected to tick up to 7.9% from 7.5%.
Hiring sentiment is equally sobering: 57% of owners say there are few or no qualified applicants for open jobs.
While ADP’s National Employment report, released last week, added a robust 475,000 positions, small businesses lost 96,000 workers at companies with 1-49 workers.
Overall, the broader Optimism Index decreased by 1.4 points to 95.7, the second consecutive month it came in below the 48-year average of 98.