Small business owners are hesitant to make additional investments due to pessimism regarding the ongoing U.S. economic recovery.
Just 29% of small business owners plan to increase investment, a decrease from 35% in the spring, according to a quarterly poll conducted by the U.S. Chamber of Commerce and MetLife. A fraction of those polled, just 7%, believe that the U.S. economy is in “very good” health.
“Economic momentum has cooled off this quarter as a rise in COVID-19 cases, workforce shortages, and supply chain woes led to caution among small businesses,” Chamber of Commerce Vice President of Small Business Policy Tom Sullivan said in a statement Tuesday.
In August, the economy added just 235,000 jobs, less than a third of the number economists had predicted. Some economists and business groups blamed the current labor shortage for the slow job growth while others, including President Joe Biden, pointed to the recent coronavirus surge driven by the delta variant.
Half of small business owners reported having job openings that they were unable to fill, according to a Sept. 2 survey from the National Federation of Independent Business (NFIB). Recent Department of Labor data showed that the economy had roughly 10.9 million job vacancies as of July 31. (RELATED: Fed Could Soon Lose Control Of Inflation Like In 1960s, Economic Historian Says)
“Small employers are struggling to fill open positions and find qualified workers resulting in record high levels of owners raising compensation,” NFIB Chief Economist Bill Dunkelberg said after the survey was published.
Overall, there are 5.5 million less jobs in the U.S. than there were prior to the pandemic, according to government data.
President Joe Biden speaks about his Build Back Better agenda on Aug. 12. (Mandel Ngan/AFP via Getty Images)
In addition, indices measuring inflation have repeatedly hit multi-decade highs over the last several months. Consumer prices spiked at an annual rate of 5.3% in August, markedly higher than the Federal Reserve’s baseline 2% target rate.
“Inflation continues to surge, thanks to the Democrats’ reckless spending,” Alfredo Ortiz, president of the small business advocacy group Job Creators Network said on Tuesday. “The consequence is the ‘Biden pay cut,’ with prices rising faster than wages.”
While economic data has painted a grim picture for the economic recovery, more than half of small business owners are confident in the health of their business, the Chamber of Commerce and MetLife poll showed. Sixty-six percent of the respondents said their cash flow is good.
Still, 34% of the small business owners surveyed said revenue is currently their biggest challenge, according to the poll. The Chamber’s Small Business Index score, a measurement of small business confidence and economic conditions, is 56.6 compared to its pre-pandemic score of 71.7.
The poll surveyed about 750 small business owners between July 16-30, 2021. The margin of error was +/- 5.6 percentage points.
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