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Sometimes, pessimists win.
As eternal optimists, we hate to admit it, but every now and then, the glass-half-empties of the world get to point an accusatory “we told you so” finger our way.
Case in point: The latest disappointing small business optimism report.
Small business confidence hit its lowest level since 2012, according to the National Federation of Independent Business’s March report. That marks the 27th month in a row that the small business optimism index has dipped below 98, the 50-year average, according to the NFIB.
In March, the NFIB’s optimism index dropped 0.9 of a point from February, to 88.5.
The primary culprit behind this growing pessimism? Inflation, according to the quarter of respondents who dubbed it their “single most important problem.”
“Inflation has once again been reported as the top business problem on Main Street and the labor market has only eased slightly,” NFIB chief economist Bill Dunkelberg said in a statement, adding that small business owners continue to “manage numerous economic headwinds.”
That inflationary pressure tracks with the percentage of owners, a seasonally adjusted net 28%, who raised average selling prices from February. That’s a 7 point jump from February. A third of respondents reported that they also planned price hikes in March.
And few small business owners expect a miracle turnaround anytime soon. The percentage who expected real sales to increase slipped eight points from February to a seasonally adjusted net negative of 18%.
The NFIB called the net sales expectation “the main contributor to the decline in last month’s Index.”
The report’s findings suggest “the small business sector is showing signs of a potential slowdown in economic activity.”
While the Federal Reserve has “taken notice” of inflationary pressure, it’s still waiting to cut rates. “In the meantime, small businesses will have to manage higher financing costs a bit longer,” the NFIB noted.
Pessimists, you win—for now.