US Markets
Tuesday, April 9th, 2024 2:14 pm EDT
Key Points
- Small business confidence hits lowest level in over 11 years for March, reflecting concerns over persistent inflationary pressures.
- A quarter of respondents identify rising costs, particularly inflation and higher input/labor costs, as the primary challenge, leading to price hikes and increased compensation.
- Despite some indicators suggesting a moderation in inflation, such as the Commerce Department’s measure of personal consumption expenditures prices, concerns remain, with expectations for substantial price increases across various sectors, including rent, gas, and food.
In March, small business confidence plummeted to its lowest level in over 11 years, signaling deep concerns among proprietors regarding persistent inflationary pressures. The National Federation of Independent Business (NFIB) reported a reading of 88.5, down nearly a point from February and marking the lowest level since December 2012. Rising costs emerged as a primary worry, with a quarter of respondents citing inflation, particularly escalating input and labor costs, as their most pressing issue. Amidst these challenges, a net 28% reported raising average selling prices, and 33% planned additional price hikes, indicating ongoing inflationary pressures. Moreover, a net 38% stated they raised compensation, reflecting an increase in labor costs, which rose by 0.3% in March and 4.1% from a year ago, according to the Labor Department. While other indicators suggest a moderation in inflation, such as the Commerce Department’s measure of personal consumption expenditures prices showing an annual rate of 2.5% in February, Fed policymakers continue to monitor inflation expectations closely. A New York Fed survey revealed expectations for a 3% inflation rate over the next year, while rent increases are anticipated to surge by 8.7%, underscoring concerns about escalating prices across various sectors. Despite expectations of declining shelter inflation, challenges persist, with respondents forecasting substantial price increases in gas and food, highlighting the complexity of managing inflationary pressures for small businesses and policymakers alike.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/04/09/small-business-optimism-hits-11-year-low-as-inflation-fears-wont-go-away.html
