The National Federation of Independent Business says small businesses should expect tough times in 2023, even though inflation has slowed. The organization’s monthly Small Business Optimism index fell 2.1 points in the month of December, to 89.8 from 91.9. That was the smallest monthly decline since September, and the NFIB says it’s a result of rising economic concerns among small business owners.
Three out of four business owners said they were raising prices, down eight points from a month earlier, but inflation remained their top concern with nearly a third, or 32%, reporting it.
The NFIB’s Chief Economist Bill Dunkelberg says small business owners aren’t optimistic about 2023 because sales and business conditions are expected to go down. Businesses and operations are still changing to compensate for the economic uncertainty and persistent inflation.
Still, 55% of the people surveyed said they were looking for new employees in December, but 93% said they didn’t have enough qualified candidates. The number of companies planning to raise wages in the next three months fell from November by 27%, or more than a quarter.
Small businesses are facing high inflation and rising borrowing costs as the Federal Reserve keeps raising interest rates to combat inflation, according to the survey, so it’s a tough time for them. Since small businesses rely more on banks and other lenders to finance their operations and don’t have access to capital markets like larger firms do, they’re likely to have higher borrowing costs. That’s why many banks offer a range of business loans and lines of credit with competitive interest rates to help small businesses meet their financial needs.
Over the months, fewer owners expect better business conditions.
Separately, the price of computers fell 16.2% in December, while prices for other electronics fell 12%. Appliances fell 2.1%, while toys fell 7.1%. Prices for computers fell 16.2% over four months of price declines.
There have been declines in online shopping because the environment has changed. After soaring during the Coronavirus pandemic when many people were shut in, online shopping has returned to normal and prices have dropped. It also slowed down due to aggressive discounting during the holidays.