Inflation and Worker Shortage Top List of Small Business Concerns

Inflation and Worker Shortage Top List of Small Business Concerns
 
Small Businesses are regaining confidence, but inflation and a lack of workers are chief obstacles, according to the latest national surveys.
Why it matters: “Small business owners’ optimism is plowing through economic uncertainty, but they now face new obstacles with rising inflation, labor shortages, and supply chain challenges,” said Tom Sullivan, U.S. Chamber Vice President for Small Business Policy.

By the numbers:
•  The Index reached a pandemic-high of 63, which is up from last quarter’s score of 56.6.
 
•  77% of small business owners are optimistic about the future. 
 
•  38% plan to hire more workers, up from 28% last quarter.

However:
•  74% surveyed said inflation is a top concern, and 63% said they had to increase prices on their products or services.
 
•  55% said the worker shortage crisis has disrupted their supply chains.
 
•  60% say they expect supply chain disruptions to make it difficult for their business to manage the holiday season.
National View: "The two principle headwinds hurting small businesses are inflation and the worker shortage crisis." U.S. Chamber Executive Vice President and Chief Policy Officer Neil Bradley told Fox Business. The 'Build Back Better' plan being debated in the Senate "will add to the inflationary pressures. It's like pouring gasoline on top of a fire."
 
Inflation Hits 40-Year High
 
Prices rose an astounding 6.8% on annual basis, according to November’s Consumer Price Index released last week. Prices rose a steep 0.8% from October to November alone.

Why it matters: November’s inflation rate is the largest increase since July of 1982 – nearly 40 years. Inflation has taken off since early this year. After a brief leveling off over the summer, prices have accelerated the last three months.

By the numbers: Here are some eye-catching annual price increases:
•  Used cars: +31%
 
•  New cars: +11%
 
•  Car and truck rentals: +37%
 
•  Gas: +58%
 
•  Energy: +33%
 
•  Food at home rose 6.4% annually, but meats, poultry, fish, and eggs are up 13%.

Bottom Line: Look for prices to remain at current levels or higher until supply chain issues abate and more workers come back into the workforce. Hopefully both those things occur by early 2022. After that, it will be up to the Federal Reserve to bring inflation back down to a more acceptable level.