(Yahoo!Finance) - Small business owners think the economy stinks right now.
In a report out Tuesday morning, the National Federation of Independent Businesses revealed confidence among small businesses polled by the trade group was the worst they've found in the 48-year history of the survey.
Last month, business owners expecting better conditions over the next six months fell to a net negative 61%. Said another way, the difference between those expecting better or and those expecting worse conditions was -61%.
Not great!
The NFIB's headline optimism reading for June came in at 89.5, the lowest since 2013.
Digging into the report's details, however, and we see another version of the same story being told across the business and corporate world right now — everything seems terrible, but our actions suggest otherwise.
Especially when it comes to hiring.
"It's a mixed picture on Main Street," said Bill Dunkelberg, chief economist at the NFIB. "Housing is still booming (but slowing) and restaurant sales continue to trend higher. Owners can’t find enough workers, not characteristic of a recession where unemployment is high, not low."
Last week, the June jobs report showed hiring demand remains robust in the U.S. economy, with some going so far as to say this report made a "mockery" of calls that the economy is already in recession.
And in broad strokes, the NFIB report affirms this view. "Job openings and hiring plans are at record levels," Dunkelberg added. "The percent of owners raising compensation is high, too. The percent of owners raising selling prices is historically high. Doesn’t sound like a recession, at least from the employment side."
Where things look more recessionary, once again, is inflation.
Some 34% of small business owners said inflation is the biggest problem facing their business today, the most since the fourth quarter of 1980.
And inflation data due out Wednesday isn't going to be pretty.
Economists expect data for June will show the consumer price index rose 8.8% last month, the most since December 1981 and a new high in inflation for the pandemic-induced cycle. With the White House running interference on this data a day before its release, one wonders if this consensus estimate isn't dour enough.
Moreover, just 3% of small business owners think now is a good time to expand their business.
And while demand for labor may serve as a positive macro signal, the current frictions in the labor market only further pressure small businesses and add to frustrations in the sector.
In a note to clients on Tuesday, Mahir Rasheed, U.S. economist at Oxford Economics, noted: "Exacerbating the toll of sharp inflation pressures is a labor supply environment that has failed to make significant progress. With 50% of owners looking to fill current job openings, 94% of those hiring reported few or no qualified applicants."
Of course, filling open roles with qualified applicants can often be achieved by offering higher wages or meeting worker requests like partial or full-time remote work. Though when hardly any businesses view the present as a good time to expand, making the case for more generous benefits to fill needs is a tough sell.
"These indicators make a very strong case for a decline in economic activity. How long and how severe is now the question," Dunkelberg said. "However this plays out, small business owners are bracing for challenging times ahead."
By Myles Udland · Senior Markets Editor
