While the fight against inflation has been well underway for the Fed and the economy over the past year and into 2024, one key demographic remains unconvinced by progress in lowering prices. That’s a small business owner.
More influential political parties are now coming closer to the view that the small and medium-sized enterprises have stubbornly maintained is closer to the truth on the ground: that inflation is not coming down fast enough. Federal Reserve Chairman Jerome Powell acknowledged on Wednesday that he sees “no further progress” this year after three months of disappointing data on inflation. Market traders, not too long ago ecstatic about rate cuts and expecting the Fed to cut rates up to six times this year, are now more likely to see at most one or two cuts.
CNBC|SurveyMonkey’s Q2 2024 Small Business Survey shows that disappointment with inflation is nothing new for small business owners, with dissatisfaction with high prices once again on the rise.
One in four small business owners (24%) told CNBC they believe inflation has peaked, down from 29% in the previous quarter, and back to where economic indicators were a year ago. Ta. The percentage of small business owners who expect inflation to rise in the future is trending upward as well, rising from 69% in the first quarter to 75% this quarter.
“Small business owners are the driving force of our economy, and data shows that small business owners remain pessimistic about overcoming inflation,” said Lara Belonogov, senior director of brand management and research at Survey Monkey, in announcing the second quarter survey. It shows that.”
This CNBC|SurveyMonkey online poll was conducted April 8-12, 2024 among a national sample of 2,130 self-identified small business owners ages 18 and older.
Despite positive market reaction to Fed Chairman Powell’s comments after Wednesday’s FOMC meeting, small business confidence in the Fed declines, at least despite Powell largely ruling out further rate hikes this year did. Last quarter, just over a third (35%) of executives said they trusted the Fed. It’s still not down to 31% in the second quarter of last year.
“Inflation is clearly still the biggest concern for small businesses,” U.S. Small Business Administration Administrator Isabel Casillas Guzman said in an interview with CNBC’s Kate Rogers during Thursday’s virtual Small Business Handbook event. Ta. “We’ve worked to make the SBA more accessible to creditworthy borrowers. Half of businesses don’t have all or any of the capital they need.”
She suggested small business owners start with the SBA’s online Lender Match tool, as well as local SBA resource partners and regional offices that can connect you with local lenders.
One of the findings regarding whether small businesses are aligned with the broader macro perspective is the overall state of the economy. More than a quarter (27%) describe the economy as “excellent or in good shape”, with no signs of slowing despite renewed inflation concerns. It is also a notable increase from 21% in the previous year’s quarterly survey. Economic performance explains why business owners are nearly three times as likely (37%) to say inflation is the biggest risk they face, compared to the No. 2 threat, consumer demand, at 13% .
SBA Secretary Guzman cited the 17.2 million new business applications filed under the Biden administration as a sign of economic optimism despite inflation. He noted that the Biden bill promotes government spending on infrastructure and clean energy, which are engines of economic growth. “These are all small business transactions across these opportunities,” she said. “That’s the economic growth that the president has been focused on.”
But economists are increasingly linking fiscal policy-linked spending programs and increases in federal debt to the persistence of inflation.
The CNBC|SurveyMonkey Small Business Confidence Index was unchanged quarter-over-quarter at 47 out of 100, up 1 point from last year’s second quarter.
The CNBC|SurveyMonkey data is consistent with other recent small business survey findings. In a survey of 10,000 small businesses released this week by Goldman Sachs, 71% of small business owners said inflationary pressures had increased on their businesses in the past three months, and 49% said they had no choice but to raise prices. The answer is that it is no longer available. In a CNBC survey, 48% said they were raising prices.
Inflation will play a big role in how America’s small business owners lean in the presidential election.
Inflation was the top issue that small business owners said they would vote on, with 63% of survey respondents citing inflation, followed by economic growth at 61%.
Confidence in President Biden’s handling of the presidency, which is typically low among the conservative-leaning small business segment, remains below the surface in this survey at 31%, down 2 percentage points from the previous quarter. Among Republican small business owners surveyed, 5% approve of the job Biden is doing. Among Democrats, 82% of small business owners support Mr. Biden, but pollsters say the drop below 90% within their own party is a sign of dissatisfaction.
Biden is also gaining support from his supporters, with the overall small business confidence index for this survey subset at 61, unchanged from the previous quarter and up from 55 in the third quarter of 2023.
A CNBC survey found that in some areas, small business owners who identify as either Republicans or Democrats are in rare agreement. Both argue that they are neglected compared to big business when it comes to government policy.
A Goldman Sachs study found that 55% of business owners are dissatisfied with the amount of attention their small business issues receive from candidates. Inflation was the most frequently cited problem, at 73%.
Guzman noted that the SBA is doubling the number of small loans it makes, not just to start-ups, but also to women and people of color, who are starting businesses at the highest interest rates. . He also said much of the government’s loans are flowing into “rural banking deserts.”
Guzmán also said that according to the government’s latest scorecard, the total amount of government contracts awarded to small and medium-sized businesses reached 28%, or about $178 billion. “We want more people to do business with the world’s largest buyers,” she said.
