Small biz owners’ inflation fears soar as fed preps to raise interest rates

RESEARCH TRIANGLE PARK – Nine in ten small business owners now say inflation is impacting their finances in a new survey published today just ahead of the Federal Reserve’s expected increase in interest rates as part of an attempt to get rising prices under control.

In fact, half of small business owners say that inflation is now their biggest concern. And 41% are worried about rising interest rates – up substantially from earlier this year.

“Seven in team believe the worst is still to come,” adds the MetLife and U.S. Chamber of Commerce Small Business Index, which is conducted quarterly.

How are businesses adapting?

• 7 in 10 small businesses report raising prices
• 37% have cut staff
• 40% have taken out loans
• 31% have reduced the quality of products or services

But inflation is just one of numerous concerns about the economy. Overall confidence fell to 62.1, a 6.6 percentage point drop from the second quarter in what is the biggest one-quarter decline since the COVID pandemic struck in 2020.

Other findings:

• “Very concerned” about inflation rose to 54% among businesses surveyed, up from 31% in the first quarter.
• 88% of small businesses are concerned about the U.S. entering an economic downturn in the next year
• 54% saying they are very concerned
• 59%of small business owners believe the U.S. economy is either in “somewhat poor” or “very poor” health. That’s up 10 percentage points from last quarter.
• 38% of  small businesses expect to increase staff
• 61% expect to increase revenues over the next year
• 83% say rising prices have significantly impacted their businesses

“In recent quarters there has been optimism from small businesses who still felt good about how their business is doing,” said Tom Sullivan, Vice President of Small Business Policy at the U.S. Chamber of Commerce, in a statement. “However, inflation is really hitting small business hard, and that reality is negatively impacting their confidence, their ability to hire, invest in their businesses, and grow.”