- Small business confidence in the economy dimmed during the past several weeks amid persistent price pressures and a tight labor market, according to two recent surveys.
- More than half of small businesses identified inflation as one of their biggest challenges, the U.S. Chamber of Commerce found in a survey, aligning with results from a poll by the National Federation of Independent Business.
- At least two out of five small businesses reported difficulty filling open jobs, according to the surveys. “With inflation still outpacing revenue expectations, small business owners are wary of the future and continue to have an overall negative impression about the national economy,” Tom Sullivan, the chamber’s vice president of small business policy, said in a statement.
Economic growth has cooled during the current quarter from the torrid 5.2% pace of Q3 and many economists, while abandoning recession forecasts made earlier this year, now predict a significant slowdown sometime during the first half of 2024.
A pullback in business investment and consumer outlays will probably rein in annualized gross domestic product growth during Q4 to 2.6%, according to an estimate released Thursday by the Federal Reserve Bank of Atlanta.
Fed officials on Wednesday predicted GDP will expand just 1.4% next year and 1.8% in 2025. Fed Chair Jerome Powell dismissed the idea that the U.S. is headed toward a downturn.
“I think you can say that there’s little basis for thinking that the economy is in a recession,” Powell said Wednesday after a two-day meeting of policymakers, while cautioning that “it’s always a real possibility.”
More than two out of three economists (67%) believe Fed policymakers will pilot the economy to a “soft landing,” holding the main interest rate high enough to curb inflation without causing a recession or triggering widespread layoffs, Wolters Kluwer found in a survey of more than 50 economists.
CEOs at large companies also believe the economy will slow but not slump, growing 1.9% next year, or a half percentage point more than predicted by Fed officials, the Business Roundtable found in its Q4 survey of 141 chief executives.
CEOs in the aggregate plan to trim capital spending while expanding payrolls, the Business Roundtable said.
“The results of this quarter’s survey are consistent with an economy that is cooling and the Federal Reserve’s strategy to bring inflation back to target,” Business Roundtable CEO Joshua Bolten said in a statement.
Small businesses, which generate roughly 44% of GDP, have a dimmer outlook, with just 25% saying the economy is in good health, according to the U.S. Chamber and MetLife, which co-sponsored the survey conducted in October.
Despite some loosening in recent months, the labor market remains tight for small businesses, NFIB found. Among businesses hiring or trying to fill open positions, 93% reported few or no qualified applicants.
“Job openings on Main Street remain elevated,” NFIB Chief Economist Bill Dunkelberg said in a statement. “Even with the growing economy, small business owners have not seen a strong wave of workers to fill their open positions.”