Inflation risk has reached a new high for small business owners

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Washington DC – Quarterly of MetLife and the American Chamber of Commerce Small business index, released today, inflation among small business owners has reached alarming levels. A majority (90%) of small businesses say they are concerned about the impact of inflation on their business, with 54% so true Concerned, that’s up from just 31% in Q1.

Half of small businesses (50%) say inflation is the biggest challenge for small businesses right now, marking the fifth consecutive quarter of rising stress over inflation. Seventeen in ten (71%) believe the worst is yet to come in terms of inflation.

Tom Sullivan, vice president of small business policy at the U.S. Chamber of Commerce, said: “There was optimism from small businesses that still feel good about how their business is doing in recent quarters.” “But inflation is really hitting small businesses hard, and that fact is having a negative impact on confidence, hiring, investing in their businesses and growing.”

The pessimistic outlook on the economy contributed to the index’s biggest decline since the start of the pandemic to 62.1, down from 66.8 in Q2. Small businesses also say they lack confidence in the national economy and their local economy — and their current cash flow.

The survey found that 88% of small businesses are concerned that America will enter a recession next year, while 54% say they are. so true He is concerned. A majority (59%) of small business owners believe the U.S. economy is in either “somewhat weak” or “very weak” health, up 10 percentage points from the previous quarter.

While two in three (66%) say they are comfortable with their current cash flow, this is down from 73% in the previous quarter, the first significant decline since April 2020. Also falling slightly this quarter is the percentage of small businesses that expect to add workers. (38%), and forecasting next year’s earnings (61%).

Small business owner Tom Richter has seen inflation at his commercial cleaning services company in Midvale, Utah.

“The increase in gas has forced us to increase prices for customers across the board. The increase in raw materials has impacted the chemicals and equipment used in our business,” said Richter, principal owner of Utah’s Jan-PRO. “Our franchise owners have had to increase their wages for their employees who do their daily work.”

Among small business owners who say inflation has had the most impact on their business (83% of respondents), the majority cite the cost of goods and supplies (65%) and utilities or fuel (50%) as the ones they’ve seen the most. Influence.

“The growing negative sentiment and concern among small business owners underscores the challenging economic environment they are currently navigating,” said Cynthia Smith, senior vice president of regional business at MetLife. “We’ve seen how resilient small businesses can be even in the face of bad business conditions, and that kind of resilience is needed as small business owners face increasing economic uncertainty.”

Additional findings:

  • When asked to choose Between reducing inflation or avoiding a recession, 59% now believe that the priority should be reducing inflation and 41% should prioritize avoiding a recession.
  • 7 out of 10 small businesses struggle to cope with inflation They report an increase in prices due to inflation, followed by those who say they have taken out a loan (40%), reduced staff (37%), or reduced product or service quality (31%).
  • 42% say their local economy is in poor health. For the first time since Q1 2021, more than the proportion who say they are in good health (31%).
  • 3 out of 4 small businesses (76%) They say they plan to adapt to a changing economy. A majority (61%) think the economy will change faster than it has in the past.
  • They say 40% so true He is concerned. About the effect of increasing interest ratesin their business (up 11 percentage points from Q1 2022).
  • The majority (51%) say they have changed their supply chain Over the past year, small businesses have been shortening their supply chains to rely more on local suppliers.
  • Concerns over Covid-19 have faded. Last year at this time from 23% to 13%, due to the increasing importance of economic issues.

Directory of small business

MetLife and the American Chamber of Commerce Small business index It’s part of a multi-year collaboration between MetLife and the U.S. Chamber of Commerce to raise the voice of America’s small business owners and highlight the important role they play in the nation’s economy. The quarterly index, an online survey of 752 small business owners and decision makers, is designed to take the temperature of the sector, see where small business owners are confident and where challenges lie.

The Q3 2022 survey 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 American Chamber of Commerce

The US Chamber of Commerce is the largest trade organization representing companies in all sectors of the economy. Our members range from small businesses and local chambers of commerce on America’s main streets to leading industry associations and large corporations.

They all share one thing: they rely on the American Council to be their voice in Washington, across the country and around the world. For more than 100 years, we’ve supported pro-business policies that help businesses create jobs and grow our economy.

About MetLife

MetLife Inc. is changing the world. In the year Founded in 1868, MetLife operates 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.

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