The Small Business Optimism Index (SBOI) fell for the sixth straight month, according to the National Federation of Independent Businesses (NFIB), an association of small business owners based out of Tennessee.
According to the NFIB’s recent survey, the SBOI is currently at 89.5, its lowest level since January 2013. In the survey's 48-year history, expectations about better business conditions over the next six months have never been lower. The NFIB's Chief Economist, Bill Dunkelberg, notes that the biggest issues are inflation and worker shortages. These concerns are global as well as local, as many owners are concerned that these problems could be an indicator of a potential incoming recession.
A remarkable 34% of small business owners note that inflation is their biggest issue in business. This percentage is at its highest level since 1980. The issue of inflation shows no signs of letting up, even after policymakers approved a 75-basis point rate hike in June 2022. Rates are expected to be hiked again by another 75 points in July.
Another problem, according to small business owners, is that of onboarding new employees. Half of owners report that they have trouble filling open roles, and the Labor Department's statistics substantiate that notion, as there were 11.3 million open jobs as of May 2022. For eight consecutive months, the number of available jobs has been over 10 million—more than 3 million higher than the record high of 7.7 million prior to February 2020. And according to the SBOI survey, 94% of owners state that very few or no qualified individuals applied for their open roles at all.
In response to this worker shortage, owners have increased their wages to encourage worker retention. More than 48% of respondents reported increasing their worker's pay in June, and an additional 28% plan to do so in the next couple of months. However, with the economic outlook grim, owners are concerned about how sustainable this model is with a potential recession in the future.