Small business confidence took a hit in the final quarter of the year, reflecting concerns over the immediate economic outlook, ongoing worker shortages, and persistent inflation, according to the latest Small Business Index by MetLife and the U.S. Chamber of Commerce. The index dropped to 61.3 last month, marking a 7.9 percentage point decrease from the previous quarter.
Tom Sullivan, Vice President of Small Business Policy at the Chamber of Commerce, noted that with inflation surpassing revenue expectations, small business owners are apprehensive about the future and maintain an overall negative outlook on the national economy.
Key Findings:
- Worsening Economic View: Only one-quarter of small businesses view the national economy as in “good health,” with 30% expressing a positive view of their local economy—both down 8 percentage points from the previous quarter.
- Persistent Inflation Concerns: For the sixth consecutive quarter, 50% of small businesses identified inflation as a significant challenge. Despite a decrease in the consumer price index from its peak in June 2022, it remains above the Federal Reserve’s 2% target. Prices are up by a striking 17.23% compared to January 2021.
- Hiring Challenges Persist: In the October to December period, hiring remained a significant obstacle for small businesses. About 45% of owners reported actively seeking new talent in 2023, with half finding it challenging to offer competitive pay and benefits. Additionally, 60% found it difficult to meet existing employees’ salary expectations.
- Optimism in Personal Finances: Despite external challenges, about two-thirds of small businesses expressed optimism about their own financial health. Many small businesses reported doing well despite the persistent economic challenges.
- While concerns over the economic landscape prevail, small business owners continue to find some solace in the resilience of their own enterprises. Sullivan highlighted that holiday shopping records and positive self-assessments indicate that, despite ongoing challenges, many small businesses are holding their ground.
Many small businesses are looking for a way to ride out the potential storm even though there is speculation that the Fed will lower rates in Q2 of 2024. With rates at the highest they been for years and inflation still being persistent, available credit can be hard to come by. That’s Regium Funding offers business funding with fees as low as 1% per week.
