Small business optimism on the rise despite inflation concerns

The vast majority of small-business owners say they finally see the light at the end of the Covid-19 tunnel, economically speaking. Other CEOs aren’t so sure.

According to a new survey from the U.S. Chamber of Commerce Small Business Index and insurance giant MetLife, 77% of small-business owners say they’re optimistic about the future of their business, and 62% say their business is in good health. Nearly half say they plan to spend more money next year than they did this year.

For many, that includes ramping up their hiring plans — even despite a nationwide labor shortage — alongside the official “end” of the pandemic, which medical experts expect sometime in 2022.

“You talk with small business owners who have been at the deepest and darkest hole — the pandemic — and there is this glimmer of light,” Tom Sullivan, the Chamber’s vice president for small-business policy, tells CNBC Make It. “That glimmer of light … has given small businesses incredible optimism.”

But other CEOs say unbridled spending feels premature. Earlier this month, a roundtable of CEOs from various sectors of the economy told CNBC that they only have one message: Except more economic volatility, regardless of the pandemic’s status.

“It’s not one particular type of volatility,” Shane Grant, CEO of Danone North America, said. “It’s enormous volatility in our supply chain. It’s everything from input availability, capacity, transportation, labor, it’s Covid adaptations by ways of working adaptation. It’s this accordion economy of sort of stop-and-go and the adaptations required.”

The new levels of small-business optimism comes despite a bevy of economic challenges, especially during the holiday shopping season.

In the survey, published Tuesday, nearly two-thirds of respondents said they had to raise prices to account for rising inflation, and are expecting supply chain disruptions to hurt their businesses. Almost half said they’ve had trouble filling jobs amid the worker shortage.

“I don’t know any small business that isn’t always worried, and that worry is certainly strongest [now] when they talk about inflation,” Sullivan says. “But worry is not holding back optimism. That’s for sure.”

A major reason for that optimism, Sullivan says: Perspective.

Even once the pandemic lockdowns of 2020 ended, small businesses struggled to recover. The country’s labor shortages and supply chain issues have persisted all throughout 2021, and U.S. gross domestic product only managed to edge past its pre-pandemic levels in July.

Compared with the intense hardship that many small-business owners have experienced since the start of the pandemic, the prospect of increased consumer spending during the holiday season — and into 2022 — is enough for them to feel confident about the future, Sullivan suggests.

If the optimism is warranted, the lofty prices you’ve probably noticed at your favorite small businesses could finally fall sometime next year. Just last month, year-over-year U.S. inflation rose 6.8% — the country’s fastest rate since 1982, according to the Department of Labor.

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