The Biden White House appears to be having trouble persuading the American people to believe its optimistic view of the economy, known as Bidenomics. This week’s small-firm poll revealed the reasons why it is so difficult to market that idea.
According to Bill Dunkelberg, the National Federation of Independent Company’s senior economist, small company owners have “dismal” expectations for business conditions and sales growth. The NFIB’s small business optimism index increased by 0.9 points from June to July, but it still came in considerably below its 49-year average of 98, at 91.9.
It marked the 19th month in a row that the reading fell below average.
The percentage of business owners who anticipate improved business circumstances over the next six months increased 10 points from June, although it is still very low by historical standards at a net -30 percent.
Although the percentage was down three points from June, it was still a historically high 21% of business owners who cited inflation as their most significant operational challenge.
The net percentage of owners who increased average selling prices decreased to a net 25 percent, which is still strong by historical standards but the lowest since January 2021. 40% indicated their typical selling prices were high, while 14% claimed they were low. Price increases are most frequent in banking, retail, wholesale, and construction, according to the NFIB. A net 27% of the respondents indicated they will be raising prices in the future.
Since small firms frequently serve as leading indicators of economic trends and provide close to half of all employment in the private sector, the NFIB poll offers a valuable window into the state of the economy.
According to Dunkelberg, “small business owners want to hire people and profit from strong consumer spending now because they have dim views regarding future sales growth as well as business circumstances. Inflation has slightly decreased on Main Street, but difficulty hiring continues to be a top business concern.”
Owners reported having 42 percent of unfilled positions that were difficult to fill, which was unchanged from June but is still quite high historically.