Most small business owners fear the U.S. economy will worsen next year

Small business is growing Worries about the fate of the U.S. economy as the U.S. grapples with high inflation, supply chain and labor shortages, and rising interest rates.

According to a poll conducted this month by business coaching and peer consulting firm Vistage Worldwide Inc., 57 percent of small business owners predict U.S. economy Next year will only get worse, matching the lowest confidence level in April 2020. Last month, 42% of small business owners had an equally grim outlook for the economy.

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Businesswoman closed her business activity due to COVID-19 lockdown. (iStock / iStock)

opinion polls, which Wall Street Journal It was first reported as part of a broader confidence index that showed its biggest year-over-year drop in May since the COVID-19 lockdown in spring 2020. While prices continued to rise, the number of small businesses expecting increased revenue fell to 61% in the coming year, down sharply from the May 2020 level of 79%.

Data showing that small business owners are pessimistic about the economy relies on responses from multiple industries, including manufacturing, consumer goods and services.

Even big companies are feeling the effects of stagnant supply chains, rising prices and worker shortages.

Walmart reported an increase in sales in the most recent quarter, but noted that higher costs for products, employees and supply chain hurt the company’s bottom line.

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barber shop closed

In this May 6, 2020 file photo, a woman walks past a closed barber shop in Cleveland. (AP Photo/Tony Dejak, file) (AP Photo/Tony Dejak, file)

Target’s profit fell in its quarterly earnings report earlier this month as inflation and supply chain costs capped profits.

Supply chains are also seeing signs that consumers are starting to spend less, especially on discretionary purchases, amid rising prices for natural gas and other staples.

However, small businesses don’t have the financial flexibility of larger corporations, so they often struggle to cope with economic hardships. Many small business owners say their companies have been hurt by the COVID-19 pandemic and a host of economic challenges. Government aid programs to help ease the financial burden on businesses have largely run out of money.

However, some small businesses remain optimistic or neutral on the economy due to factors such as low unemployment, strong consumer spending and historically high demand for workers. The survey found that 12% of businesses expect the economy to improve, with another 28% saying they believe things will remain the same.

Gotham Bar and Grill

In this Tuesday, Nov. 27, 2018 photo, a bartender talks to a customer at Gotham Bar and Grill in New York. (AP Photo/Mary Altafer/AP Photo)

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In terms of employment, small businesses with fewer than 50 employees are struggling. Those companies slumped in February and April, according to ADP’s payroll data, while large corporations continued to add workers.

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A Goldman Sachs survey in April found that nearly 88 percent of more than 1,100 small business owners surveyed said the difficulty of hiring workers had worsened or remained the same since January. More than three-quarters of small business owners report having challenges recruiting qualified employees, and they say it is difficult for them to compete with larger businesses on pay and benefits, the survey showed.

The Wall Street Journal contributed to this report.

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