According to the National Federation of Independent Business (NFIB), small business optimism continued to decline throughout September.
The Small Business Optimism Index, a survey used to analyze trends in the experience of U.S. entrepreneurs, recorded a slight decline in September, with a score stuck at 90.8. By comparison, the index's average score is 98, the highest since 2021, according to the NFIB. Although optimism improved in July, September marked the second consecutive month of decline.
Bill Dunkelberg, chief economist at NFIB, said the decline in small business optimism is due to increased uncertainty about the health of the economy. “Sales growth has slowed for small and medium-sized businesses, putting pressure on profits, leaving business owners with little choice but to raise selling prices for financial relief,” he said. The biggest concerns among entrepreneurs are inflation and rising interest rates. The Fed is gradually easing its fight against rising consumer prices, but the cost of goods and services is still rising faster than the government's 2% goal.
Nevertheless, the NFIB report does not necessarily indicate that small business owners are pessimistic. In a Bank of America report, women and minority entrepreneurs share positive predictions for revenue and job growth. Despite the decline in September, the Small Business Optimism Index recorded an overall increase in the third quarter, rising to its highest level since the start of the coronavirus pandemic in 2020. One potential explanation for last month's decline is (currently delayed) government policy. shutdown. Given that this is a temporary issue, confidence in the economy could improve in the coming months, but only if some of the concerns affecting entrepreneurs are addressed by Congress. . Governments should give particular consideration to issues of inflation and interest rates. That's because these two factors continue to rank high on the list of concerns for small business owners.
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