The fight against inflation has been going well for the Federal Reserve and the economy for most of last year and into 2024, but one important demographic remains unconvinced by the progress being made in lowering rates: small business owners.
Now, the more influential parties are coming to the view that small businesses have been stubborn in saying that it is closer to the truth on the ground: inflation is not falling fast enough. Federal Reserve Chairman Jerome Powell admitted on Wednesday that after three months of disappointing data on inflation, there was “Lack of further progress” this year. Market traders, who not long ago were in rate-cut euphoria and anticipating as many as six rate cuts by the Fed this year, are now likely to see Cut one or two At most.
Disappointment about inflation is nothing new for small business owners, and their frustration with rising prices is on the rise again, according to Business Insider. CNBC|SurveyMonkey Small Business Survey Q2 2024.
One in four (24%) small business owners told CNBC they believe inflation has peaked, down from 29% in the previous quarter, and is back to where the economic sentiment reading was a year ago. The percentage of small business owners who expect inflation to rise from here also trended higher — 75% this quarter, up from 69% in the first quarter.
“Small business owners are the engine of our economy, and the data shows they remain pessimistic about beating inflation,” Lara Belonogov, senior director of brand management and research at SurveyMonkey, said in a statement upon releasing the second-quarter survey.
The CNBC|SurveyMonkey survey was conducted online April 8-12, 2024 among a national sample of 2,130 self-identified small business owners ages 18 and older.
Despite the positive market reaction to Fed Chairman Powell’s comments after Wednesday’s FOMC meeting — at least, Powell is completely out of the question Another rate hike this year – small business confidence in the Fed has declined. In the latest quarter, just over a third (35%) of business owners said they have confidence in the Fed. This has not dropped to 31%, where it was in the second quarter of last year.
“Inflation is clearly still a big concern for small businesses,” U.S. Small Business Administration Chief Isabel Casillas Guzman said in an interview with CNBC’s Kate Rogers at a Virtual Business Playbook event on Thursday. “We’ve tried to make sure the SBA is more readily available to creditworthy borrowers. Half of the companies don’t get all the capital they need, or at all.”
She suggested that small business owners start with local SBA resource partners, local county offices, that can connect them with lenders on the ground, as well as start with SBA’s online lender matching tool.
One finding for small businesses that aligns with the broader macro vision is the overall health of the economy. More than a quarter (27%) described the economy as “excellent or good,” and it was not heading downward even as inflation fears returned. It is also up significantly from 21% in the quarterly survey a year ago. The performance of the economy helps explain why nearly three times as many business owners consider inflation to be their biggest risk (37%) than threat No. 2, consumer demand, at 13%.
SBA Director Guzman pointed to the 17.2 million new business applications filed during the Biden administration as evidence of economic optimism despite inflation. She pointed to Biden’s legislation that stimulates government spending on infrastructure and clean energy, which are engines of economic growth. “This is all small business trading through those opportunities,” she said. “This is the economic growth that the president has focused on.”
However, it is also increasingly a spending plan tied to fiscal policy and the rise in federal debt that economists consider Link viscous inflation.
The CNBC|SurveyMonkey Small Business Sentiment Index was unchanged quarter-on-quarter, at 47 out of 100, and up one point from the second quarter of last year.
The CNBC|SurveyMonkey data is consistent with the results of other recent small business surveys. Goldman Sachs 10,000 Small Business Votes A poll was released this week 71% of small business owners cited inflationary pressures on their businesses as increasing over the past three months, and 49% said they had to raise prices. In the CNBC poll, 48% said they were raising prices.
Inflation will loom large in how America’s small business owners lean into the presidential election.
Inflation is the No. 1 issue small business owners say they will vote on, cited by 63% of survey respondents, followed by economic growth at 61%.
Confidence in President Biden’s handling of the presidency — which is typically low in a small business demographic that skews conservative — remains underwater in the new poll, at 31%, down 2 percentage points quarter-over-quarter. Among Republican small business owners who participated in the poll, 5% approved of the work Biden is doing. Among Democrats, 82% of small businesses approve of Biden, though polls say approval ratings below 90% within one’s party are a sign of dissatisfaction.
Biden made some gains with his supporters, as the overall Small Business Confidence Index reading among this poll subgroup was unchanged quarter-over-quarter at 61, and up from 55 in the third quarter of 2023.
The CNBC poll found that in one district, small business owners who identify as either Republicans or Democrats arrive A rare point of consensus: They both say that when it comes to government policy, they are underestimated compared to large corporations.
A Goldman Sachs survey found that 55% of business owners are dissatisfied with the amount of focus small business issues get from candidates. Inflation, at 73%, was the issue most often mentioned.
Guzman said the Small Business Administration has doubled the number of small-dollar loans, including loans to startups, as well as to women and people of color, who she notes start businesses at the highest rates. She also said more government loan volume is going into “rural bank deserts.”
The total government contracts allocated to small businesses reached this number reached 28%Nearly $178 billion, according to the government’s latest scorecard, Guzman said. “We want more people to do business with the world’s largest buyer,” she said.
