At Extreme Investor Network, we strive to provide you with the most up-to-date and valuable information on the economy. Small business confidence took a hit in March, reaching its lowest level in over 11 years as proprietors express concerns about inflation still being a significant issue. The National Federation of Independent Business reported a reading of 88.5, down nearly a point from February and the lowest since December 2012. A quarter of all respondents cited rising costs as their biggest problem.
NFIB Chief Economist Bill Dunkelberg stated, “Small business optimism has reached the lowest level since 2012 as owners continue to manage numerous economic headwinds.” Inflation was reported as the top business problem on Main Street, with a quarter of respondents highlighting higher input and labor costs as their most pressing issue. This has led to a net 28% of businesses raising average selling prices for the month and 33% planning additional price hikes.
Reflecting these escalating costs, a net 38% of businesses reported raising compensation, with average hourly earnings rising 0.3% in March and 4.1% from a year ago. Despite these challenges, other indicators suggest that inflation is receding, with the Commerce Department reporting an annual inflation rate of 2.5% in February for personal consumption expenditures prices.
Inflation expectations have remained fairly anchored, with a New York Fed survey showing respondents expecting a 3% rate over the next year. However, there has been a notable increase in rent expectations, with a surge of 8.7% over the next year. Fed policymakers target 2% annual inflation, and declining shelter inflation is crucial for easing towards this target.
Overall, small businesses are navigating economic headwinds caused by inflation, but with careful management and strategic planning, they can overcome these challenges. Stay tuned to Extreme Investor Network for more valuable insights and analysis on the economy to help you make informed investment decisions.
