How macro headwinds are impacting small businesses

Yahoo Finance Live’s Seana Smith breaks down the National Federation of Independent Businesses’ optimism index and discusses how macro headwinds are impacting small businesses.

Video Transcripts

RACHELLE AKUFFO: The National Federation of Independent Businesses is out with its business trends report for March. The survey results detailing how small business owners feel about the economy and recession forecasts, recent bank collapses, and a rising debt ceiling. Here to break down how these macro headwinds are impacting small businesses is Yahoo Finance’s Seana Smith. Hey Seana.

SEANA SMITH: Hey there, Rachelle. All right, so let’s take a look at how Main Street is feeling. And from this index, from this report, they aren’t feeling any better about the economy or overall business conditions. It’s actually starting to get a little bit worse. NFIB released its Small Business Optimism Index today, and it showed that confidence actually declined in March. It’s clear now that the owners are very worried about their future. Most of the recent drop was driven in part by turmoil in the banking sector.

The collapse of Silicon Valley Bank and also Signature Bank might be leading to tighter lending conditions. As a result here, within the survey, more of the small business owners are having trouble getting access to loans. Taking a step back here, the overall index fell to 90.1 in March, erasing the slight gains that we saw at the start of the year.

Now, inflation remains one of those big issues here for small businesses. We’ve been talking about that now for quite some time, as well as the quality of labor, labor shortages here. So, breaking that down, 43% of owners right now say that they are having a tough time finding the workers they need. Also plans to hire, that actually fell to the lowest level that we’ve seen in just about three years. When it comes to inflation, prices, they continue to go up, at least for some business owners. 37% of owners raising their average selling prices in March. Retail and construction owners among the most likely to have done so.

Another challenge that persists, supply chain issues. Now, disruptions are still having a significant impact on businesses, something that isn’t necessarily in the headlines day in and day out. 19% of owners reported those issues. And looking at it by industry, shortages were most common in transportation, in retail, and also within the manufacturing sector.

So it’s clear here from these numbers, Rachelle, that things are not improving on Main Street. This is the 15th month in a row that the index has been below its 49-year average. So, some things to think about here when we get the pulse of Main Street and exactly how some of these big headlines, like the collapse of Silicon Valley Bank and Signature Bank, how that’s affected small business owners today.

RACHELLE AKUFFO: That’s great stuff there, connecting those dots between what’s happening on Wall Street and Main Street there. Great stuff. Seana Smith there for us.

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