Shoppers are seen in a Kroger supermarket on October 14, 2022, in Atlanta, Georgia.
Elijah Newelage | AFP | beautiful pictures
Many stock market players and the ranks of professional economists agree that inflation has peaked or is on the decline, but small business owners on Main Street don’t expect prices to rise. both high rise will soon be reduced, follow to a new poll by CNBC.
An overwhelming majority (78%) of American entrepreneurs said they expect inflation to continue to rise, according to the quarterly CNBC|SurveyMonkey Small Business Survey. That was actually unchanged from the previous quarter when 77% said they expect inflation to continue to rise.
Main Street’s belief that inflation has yet to peak comes amid recent conflicting economic data and consumer sentiment.
Wholesale prices reported on Friday more than expected increase in November as food prices continue to rise. However, the producer price index, a measure of what companies get from products in the process of being manufactured, rose 7.4% from a year ago, the slowest 12-month pace since October. 5 in 2021. Meanwhile, producer price index University of Michigan Consumer Confidence Index increased more than expected amid falling inflation expectations, although still at a high relative to recent history.
Megan Greene, chief economist at Kroll Global, said on CNBC’s “Squawk Box” on Friday that she thinks “highest inflation is probably behind us.”
However, inflation concerns are leading to the most cautious holiday season for shoppers since 2013, according to the report. CNBC’s National Economic Survey, with 41% of consumers saying they plan to spend less this year than they did last year. Of that group, a third said they would spend less because of inflation.
Walmart CEO Doug McMillon said Tuesday that American shoppers are still feel “stressed” due to inflation, even if that effect is not felt equally across categories.
Cheaper gas prices could help alleviate those concerns, as the price per gallon is now predicted to fall below $3 for more Americans by the end of the year. According to AAA, The national average for a gallon of unleaded gas is $3,329 on Thursday, well below the record $5.01 a gallon price on June 14 and well below the price seen before Russia’s invasion of Ukraine.
Regardless of the economic headwinds, inflation remains a top concern for small business owners.
More small business owners (45%) now say inflation is the biggest risk to their business than in any previous quarterly survey. The CNBC|SurveyMonkey Small Business Survey for Q4 2022 was conducted from November 9 to November 11, 16 out of nearly 2,600 small business owners.
According to the survey, nearly all small business owners (92%) are worried about inflation.
“I think a lot of it has been driving sentiment among small business owners lately, but especially,” said Laura Wronski, senior manager of research science at Momentive, which conducted the survey for CNBC. especially since Covid started, it’s pure risk management.” “The safe bet over the past year is that inflation will continue to get worse over time, because if small business owners prepare for the worst, they’ll be able to handle any business challenge well.” than.”
Wronski said that given the economic climate seen so far this year, “Main Street is probably a bit influenced by their experience.”
Small business owners are still convinced that a recession is on the way, although the latest data from the survey suggest recession expectations will be pushed back to next year. Previously, a majority of business owners told the survey that they thought the economy had fallen into a recession.
Risk management, says Wronski, is “why we’re seeing small business owners continue to make inflation their top concern and expect prices to continue to rise, even as indicators continue to rise.” economic numbers begin to change.”
While small business owners are generally concerned about inflation, there is some partisanship when it comes to their concerns about the economy. 51% of Republican small business owners say inflation is the biggest risk to their business, compared with 35% of Democratic small business owners.
That political divide also appears in projections for the peak of inflation, with only 11% of Republican small business owners saying inflation has reached that level compared with 41% of small business owners identifying with inflation. is a member of the Democratic Party. Those numbers were largely unchanged from the previous quarter, with slightly more independents and Democrats saying inflation peaked this quarter, in line with a more upbeat outlook than a year ago. bit from small business owners who identify as Democrats.
Shift in sentiment among survey Democrats helped President Biden’s approval ratings on Main Street went up for the first time in his presidency, though up from an all-time low. After surpassing small business owners’ approval rating of 31% in the third quarter of 2022, when inflation hit its highest to date, President Biden’s approval rating rose to 34% in the fourth quarter. , for the first time in 8 quarters. During the quarters of his presidency, there was any rise in the quarterly poll and broke a streak of six consecutive quarterly declines.
But the key to Biden’s stay on Main Street, as well as the general sentiment among small business owners, will be continued decline in inflation, or at least clearer signs that inflation is on the right track.
That’s what Federal Reserve Chairman Jerome Powell pointed out, above November 30 in a speech at the Brookings Institution that “more evidence will be needed to offer consolation that inflation is actually falling.”
“By any standard, inflation is still too high,” Powell said. “Despite tighter policy and slower growth over the past year, we have yet to see clear progress in slowing inflation. … The truth is that the path forward for inflation remains very uneven. sure,” Mr. Powell said.
