Inflation Issues For Small Businesses

In addition to getting a gauge on small business optimism, the NFIB’s monthly survey of small businesses also asks respondents about the biggest issue they face operating their businesses. On a combined basis, the biggest concern among small businesses is taxes or government red tape. Combined, these two issues were reported as the biggest problem for 35% of surveyed firms with taxes being the main culprit after rising 3 percentage points month over month. Right on the heels of government-related concerns, labor concerns loom large.34% of respondents said that cost or quality of labor pose the biggest issue their business face with costs accounting for 8%, unchanged from last month, while the quality of labor jumped from 24% to 26%. For the latter, that is in the top 1% of all readings hitting the highest level since November 2019. If there is any positive to pull out of what Main Street views as the biggest problems, it is the lack of companies citing poor sales. Just 5% of respondents saw this as the biggest issue; down 13 percentage points versus last year, and it is now at the lowest level since September 2018. On the downside, the number of firms reporting problematic inflation has risen rapidly going from 2% at the end of 2020 to 8% today. Such an elevated reading has not been observed since April 2012. 

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