Inflation returns as top problem facing small business owners

foxbusiness.com:

Jim Freedman, Intrepid Investment Bankers chairman, discuss how rate cuts could help small and midsize businesses with debt and capital growth on 'The Claman Countdown.' 

Small businesses continued to feel pessimistic about the state of the U.S. economy in December, reflecting fears over the persistent worker shortage and chronic inflation. 

The National Federation of Independent Businesses (NFIB), a Tennessee-based association of small business owners, said its Small Business Optimism Index rose slightly to 91.9 last month, a 1.3 percentage point decrease from November. Despite the increase, that marks the 24th straight month of readings below the 48-year average of 98.

«Small business owners remain very pessimistic about economic prospects this year,» said Bill Dunkelberg, NFIB chief economist. «Inflation and labor quality have consistently been a tough complication for small business owners, and they are not convinced that it will get better in 2024.»

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A store closing sign posted on a small business door in Queens, New York. (Lindsey Nicholson/UCG/Universal Images Group via Getty Images / Getty Images)

Inflation surpassed worker quality as the biggest threat posed to small businesses in December. About 23% of small business owners cited price increases as the single most important problem in operating their business, up one point from the previous month.

While inflation has fallen considerably from a peak of 9.1%, it remains well above the Federal Reserve's 2% target. As a result, more than one-third – about 36% – of small business owners reported raising prices in order to offset the sting of high inflation. Just 15% reported lower average selling prices.

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