Storm clouds are gathering, lots of lightening and some thunder as well. Small businesses are trying to make a buck while the getting is good. But needed labor is in short supply and inventories are not rebuilt for many. Unfilled job openings are at 48-year high levels. Forty-five percent have unfilled openings and 20% plan (hope) to fill them and increase their sales and profits. Seventy percent are raising their selling prices successfully (e.g., inflation on Main Street).

Over 50% report that supply chain disruptions are seriously impacting their operations. The Covid shutdown in China and the Ukraine war will continue to create supply-side problems for the rest of the year. Record high numbers have been reporting that their inventories are too low, an unusual occurrence in the Survey’s 48-year history.

Small business owners see the storm clouds gathering and want to make hay while the sun shines. A 48-year record high percentage think that business conditions will be worse six months from now, a problematic second half of the year. The net percent of owners expecting future real sales volumes to increase was -24%, pessimists far outnumber optimists. Only 6% think that the current period is a good time for small businesses to expand. Consumers are starting to agree, as optimism has tumbled this year, despite continued strong spending, but this might be short lived as inflation is a top concern.


Farmers are struggling with significant increases in costs. Fertilizer prices (which require natural gas to manufacture) are up 80% over two years. Fuel costs are up dramatically (gas, diesel, natural gas). Critical exports from Russia and Ukraine are impaired, the President increased ethanol content rules for gas, putting upward pressure on corn prices and supplies. Baby formula became unavailable with no interference from any other country’s government but our own. All of this feeds into our inflation problem.

Interest rates are on the rise and the interest cost of servicing our $25 trillion debt (up $6 trillion over the past two years) already costs taxpayers a record 2% of GDP. Rates have only just started their rise as the Fed fights inflation. Small businesses have been paying the lowest interest rates on loans in 40+ years, but that will change. Oil (gas) prices are at record high levels and rising as U.S. production falls (from #1 in the world) as the Administration tries to reduce fossil fuel use. The Administration wants to raise taxes to fight inflation. Higher taxes reduce private spending, raise unemployment, a painful way to fight inflation!

The stock market has posted a massive decline for the past few months, erasing trillions in (paper) wealth. 401k accounts have taken a beating. More bad news to come as the Fed hikes interest rates. As rates rise, stock values fall. Profits are also weakening as small business owners can’t keep up with rising input and labor costs. Large firms face the same problems.


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