Small business owners are concerned about the economy for the 17th month in a row, according to a National Federation of Independent Business (NFIB) report released Tuesday.
Inflation was the biggest problem for 25% of small business owners in May, up two points from April. Concern about labor quality followed close behind at 24%, with 44% of owners reporting difficulty filling job openings.
The year-over-year U.S. inflation rate was 4.05% as of May 31, compared to 4.93% in April and 8.58% in May 2022. Since the beginning of President Joe Biden’s administration, prices have gone up 18.3%.
The Biden administration has overseen the highest overall presidential inflation rate, 15%, since Jimmy Carter’s presidency.
"Small business owners lack optimism about future economic conditions due to numerous reasons that create uncertainty, including worker shortages, supply chain issues, inflation and threats of tax increases from Washington," Jon Thompson, NFIB communications director, told Fox Digital.
Small business owners expecting better business conditions over the next six months declined one point from April to a net negative 50%.
NFIB’s Small Business Optimism Index increased 0.4 points in May to 89.4. This marks the 17th consecutive month optimism about business conditions has remained below the 49-year average of 98.
December 2021 is the last time the index was at or above the average on the optimism index.
The net percent of owners raising average selling prices remains at the inflationary level of 32%. The net percent of owners who expect real sales to be higher dropped two points from April to a net negative of 21%.
While 63% of owners reported hiring or trying to hire in May, almost 90% said they found few or no qualified applicants for the open positions. A seasonally adjusted net 19% of small business owners said they plan to create new jobs in the next three months.
A net negative of only 8% of all owners reported higher nominal sales in the last three months. The net percent of owners expecting higher real sales volumes saw a three-point decrease to a net negative of 21%.
"Washington can take multiple steps to increase optimism by focusing on promoting economic growth and providing certainty, such as permanently extending the Small Business Deduction and abandoning any plans to raise taxes on small businesses," Thompson said.
The NFIB Small Business Optimism index has served as an indicator of the small business economy by collecting data on sales and the concerns of owners since 1986.