The Small Business Optimism Index from the National Federation of Independent Business (top graph) unexpectedly fell to the lowest level in over a year as surging inflation and labor shortages continue to be headwinds. As shown in the bottom graph below, the share of small businesses that are raising prices reached an all-time high of 68% last month, surpassing the previous high set in 1974. The NFIB stressed the impact that inflation is having on small businesses by stating: “Inflation continues to be a problem on Main Street, leading more owners to raise selling prices again in February. Supply chain disruptions and labor shortages also remain problems, leading to lower earnings and sales for many.” All of this goes to show that inflation pressures have remained constant ahead of next week’s critical Federal Open Market Committee (FOMC) meeting.
