Wade shares the impact of inflationary pressures and labor quality on small business optimism
WASHINGTON, D.C. (July 10, 2024) – NFIB Research Center Executive Director Holly Wade joined Brad Smith of Yahoo! Finance to discuss the challenges facing Main Street as small businesses navigate historic headwinds.
Wade analyses data from NFIB’s June SBET survey and highlights the impact of inflationary pressures and ongoing labor shortages on Main Street businesses.
Watch Wade’s interview here: https://finance.yahoo.com/video/small-business-optimism-ticks-higher-162047903.html
“We did see a bit of an improvement in our headline measure of the small business sector, our Optimism Index, and that was a great sign. We saw a one-point increase from last month, and it’s the highest reading all year. As you mentioned, [small business owners are] still pessimistic, generally speaking…And right now, inflation and labor quality are still the two main problems that they’re facing, and it’s putting a lot of pressure on small business owners to try to retain those current employees, attract applicants for those open positions, and figure out how to absorb price increases that they continue to face.
“One of the areas that is causing most of the inflationary pressures right now [is] compensation. [Owners] are still planning to increase compensation, we saw that tick up this last month, and so they’re trying to still figure out how to absorb those prices. First, it hits their earnings – so it’s absorbed by the owners take home pay – until they can figure out how to manage increasing costs at their business, which is certainly tricky when they’re competing with other businesses, large and small.
“Consumers are fatigued with price increases. They’re hesitant to go out and absorb those costs and they’re looking to be more strategic about their purchases. [One important challenge for owners is] making those tough choices of which products or services to increase the prices of to keep them competitive and keep customers coming into their business. It takes a lot of thought and time and consideration on the part of the owner or an employee having to figure out that composition.”
