It’s not just consumers who are grappling with the worst episode ofin 40 years. Small business owners also say rising costs are affecting them.
According to a recent Goldman Sachs survey, nearly 90% of small business owners say current economic trends, including inflation, supply chain issues and staffing issues, are hampering their operations. And 93% of small businesses fear that the United States will soon enter a recession, according to the survey of more than 1,500 small businesses.
Sixty-five percent of respondents said rising input costs forced them to raise the price of their goods and services. Nearly 80% of small business owners say the economy has deteriorated over the past three months, but 65% are optimistic about their own business’ positive financial trajectory this year.
Despite the misfortune and gloom, Goldman Sachs CEO David Solomon is encouraging consumers and business owners to stay positive.
“I think it’s time to be careful, but you also have to take a long-term view – we’ll get through this,” he said at Goldman’s small business summit in Washington, DC.
David Nelson, chief strategist at Belpointe Asset Management, said that among smaller companies, worries about a possible recession on the horizon now overtake inflation as their main concern.
“At the start of the year, probably the biggest fear was inflation,” he told CBS News. “We had a very aggressive Fed, they were raising rates to lower inflation expectations.”
“However, six months later, the biggest fear is of course recession, and the markets have been signaling that widely all year,” Nelson said.
“Cracks in the facade”
As the United States officially slips into a recession, rising costs are likely to weigh on consumer spending as many Americans struggle to afford basics like food and gas and wages do not not keep pace with inflation.
“Fortunately, at the start of the year, job growth was strong, but we’re starting to see cracks in the facade,” Nelson said.
Even gigantic technology companies like Alphabet, Apple, Meta and Microsoft have announced their intention toin order to reduce costs.
On a more positive note, if a recession hits, Nelson doesn’t expect it to devastate the economy.
“When you say the word recession, everyone thinks of the financial crisis. It’s nothing like that,” he said. “We could have a recession this time around, but I think it will be mild.”