Inflation concerns among small business owners remained at record highs this quarter, according to a quarterly poll conducted by the U.S. Chamber of Commerce and MetLife released on Wednesday.
The first quarter of 2023 was the fifth in a row where inflation was considered the biggest challenge for small business owners, according to the Small Business Index. A record high of 54% reported that, which is a 31-point increase from Q4 2021.
“This quarter, small businesses’ concerns over inflation are soaring and their view of the broader economy is darkening, though they still report that their own businesses are in good health,” said Tom Sullivan, Vice President of Small Business Policy at the U.S. Chamber of Commerce.
In San Francisco, minimum wage increases are based on the yearly rise in the Consumer Price Index every July 1. “That means my rate jumps from $16.99 to $18.07 or 6.36%,” said Hrag Kalebijan, owner of Henry’s House of Coffee, according to the Index.
“The challenge is keeping up with these costs, and constantly raising my prices. It seems as though I can’t keep up,” Kalebijan said. (RELATED: EXCLUSIVE: Concerns Over Inflation Among Small Business Owners Returns To Near Record High, Poll Shows)
The majority (63%) of small business owners regarded their own businesses as being in “good health,” which has stayed steady since Q2 of 2022.
“Despite anticipating potential economic headwinds in the coming months, it is encouraging to see that the majority of small business owners say their business is in good health,” says Cynthia Smith, senior vice president, Regional Business at MetLife. Small business owners have remained focused and determined, so it is not surprising to see them persevering in uncertain times.”
Federal Reserve Board Chair Jerome Powell speaks during a news conference at the Federal Reserve in Washington, DC, on March 22, 2023. – The Federal Reserve raised its benchmark lending rate on Wednesday, in line with expectations, continuing a hiking cycle to tackle high inflation while warning that recent banking troubles could hit households and businesses. The quarter-point increase raises the target range to 4.75-5.00 percent, the Fed announced in a statement. (Photo by OLIVIER DOULIERY/AFP via Getty Images)
The Q1 2023 index revealed only 20% of small business owners perceive the U.S. economy as being in “good health,” down from 27% last quarter. Similarly, only 38% of small businesses say they intend to raise their investment over the next year compared to 47% last quarter.
“Small business owners are pulling back a bit on spending as they see storm clouds in the economy appearing ahead,” said Sullivan.
Other top concerns for small business owners were revenue (22%), supply chain issues (21%), and rising interest rates (16%), according to the Index.
Perceived access to capital has significantly declined in the last five years, with only 49% of small business owners saying their current access to capital or loans is “good” compared to 67% in Q2 2017, according to the Index.
The Chamber’s Small Business Index score measures small business confidence and economic conditions with 0 being the worst and 100 being the best. The Q1 2023 score is down to 60, which is the lowest since Q3 2021.
Small businesses with under five employees were more likely to resort to spending personal savings to finance their business as 75% of them say they rely on this in comparison to 59% of businesses with 5-500 employees, according to the Index.
The poll surveyed 752 small business owners between Jan. 16-Feb. 2, 2023.
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