While the mood on Main Street has brightened, concerns about the economy, stubborn inflation and the banking system are weighing on small business owners, according to the latest quarterly survey from CNBC and Momentive.
Small business confidence for the second quarter rose slightly to 46 from 45 in the first quarter, though that still remains below the baseline for optimism. Forty percent of owners describe their current business conditions as good, up from 34% in the first quarter and nearly half (46%) say they project revenue to increase in the next year.
But just 21% say they’d describe the economy as good or excellent — less than half of those that described the economy as “poor” (44%), as challenges continue with inflation and the ongoing labor crunch.
The CNBC|SurveyMonkey Small Business Survey was conducted from April 17 through April 24 among more than 2,200 small business owners across the country using Momentive’s platform.
Inflation remains the No. Inflation remains the No. 1 concern. The survey found that less than a third (33%) of respondents have confidence in the Federal Reserve to control inflation. This is unchanged from the previous quarter. The labor shortage and supply chain disruptions round out the top three concerns for Main Street in the survey.
Inflation is proving stubborn based on the latest economic data and has been an ongoing concern for Bill Belknap, president of AEONRG, a construction company based in Downingtown, Pennsylvania. Belknap, who works in government contracts, said that higher inflation rates affect his bid prices. He is happy with the decrease in inflation over the past year, but wants to continue the trend. “I see a snowball of inflation, and other people increasing their prices. This predictability and moderation is important to our success. The banking crisis and higher rates are weighing on small business owners. Most owners polled are confident that their capital is secure. However, almost half of them say it’s difficult to get the capital they need to run. Mitchel Sellers of Iowa Computer Gurus, which has been operating in Des Moines for 17 years, said that while he hadn’t been denied a loan in the past, he was being asked to provide more information when he applied for one. “I think interest rate increases are stifling business growth. We’re not expanding as much as I would like to, because I pay interest at 6.5% on a loan I used to pay 3% for a year. This is what’s limiting our growth and my ability to develop. The National Federation of Independent Business’ latest polling shows that the higher interest rates are affecting the business environment. They tracked a decline in sentiment for the month of march and a sharp fall in the ability of getting a loan. Fed Chair Jerome Powell stated on Wednesday that he still believes that the economy can have a’soft landing.’ However, he added that a a’mild recession is also possible. Fed staffers’ position has been to expect a mild recession.
Sellers said the environment is informing the moves he makes next for his business.
“We are hedging our bets by making sure that some of the things that we don’t use, like a line of credit that we haven’t used in eight years, we retain simply so that if I need it in the future I don’t have to get approved again,” he said. “We haven’t been told no, but we do fear not being able to finance our growth or make adjustments or obtain the working capital that we may need in the future. “[bids]