The July 2024 Optimism Index rose to 93.7, according to the National Federation of Independent Business, which reports that 25% of owners of small enterprises cite inflation as their biggest headache.
The National Federation of Independent Business (NFIB) has released its latest results, which indicate that inflation is still the biggest concern for small business owners in the United States. The Small Business Optimism Index did rise by 2.2 points to 93.7 in July 2024, which was the highest since February 2022, but the index is still below the 50-year average of 98 for the 31st consecutive month.
Key Findings:
Inflation as a Leading Problem: A notable 25% of small business owners cited inflation as their biggest single problem, up four points from the previous month. This chronic concern represents the ongoing difficulties presented by escalating prices to Main Street businesses.
Profit Pressures: Reports showing a gain in profits appear to have maintained their negative direction, as net negative was registered in July with 30%. Of those which reported a profit decline, weaker sales were named in 33%, while the material cost increase described was in 17%.
Financing and Credit Access: Financing is still an issue for small businesses. In July, 2% of owners said that borrowing needs were not all met, 25% reported all credit needs were met, and an impressive 62% said they had no interest in applying for a loan. Additionally, a net 6% said their last loan was more difficult to get than any other loan they tried to get.
The persistent inflationary environment is compelling small business owners to re-evaluate their operating strategies. Many are looking for cost-cutting measures, altering pricing structures, and seeking efficiencies to offset the rise in expenses. NFIB’s results suggest that unless there are policy interventions specifically targeted at addressing inflation and supporting small businesses, Main Street enterprises will likely continue to face considerable challenges in attaining sustainable growth.