Research Center Executive Director Holly Wade presented on findings about the small business economy
During the NFIB DC Fly-in, Executive Director of the NFIB Research Center Holly Wade gave a presentation on what NFIB research shows about the state of the small business economy.
“I want to start by talking about all of the challenges and headwinds for the small business sector across the country,” Holly began as she went into detail about the biggest issues facing small businesses. “We’ve been surveying business owners for 48 years, so we have a great collection of information about how small business owners have operated their business historically.”
Holly pointed out inflation has become the biggest issue facing small business owners. “Inflation is the pain point for most small businesses, but also most consumers who are looking to make purchases… we’re looking at 8.6% inflation. In comparison, wage growth is 5%… it’s not surprising that record levels of small business owners are saying inflation is their single most important business problem. One third of owners say that inflation is the top problem facing their business. The agriculture industry is especially hard-hit, as well as manufacturing and construction.”
Another major problem facing owners is the ongoing workforce shortage. Holly pointed out that the root of this problem is a significant decrease in the labor participation rate. “There are still significantly fewer people in the labor market than before the pandemic,” Holly said. “In the leisure and hospitality industry alone, they are down 1.3 million employees from February 2020. There are 1.5 million openings in that industry. We have a long way to go to recover.”
Serious issues like these have taken their toll on small business optimism. “A net 51% of owners say they expect worse business conditions over the next six months, a 48-year record low,” Holly said.
With the issues facing small business, Holly warned that a recession was a real possibility. “But hopefully if there is a recession, it will likely be mild given that the foundation of the economy is fairly good. People are still spending money. Most people who want a job, have a job. All of these factors are very different from the 2007 financial crisis, when we had a housing bubble and other foundational issues.”
While NFIB members meet with legislators to discuss these major issues, you can amplify their voices remotely by sending a personalized message to those same legislators using this NFIB action alert.