According to Economists We don't have a Recession but Small Business Current Revenues Are The Lowest Since 2009

The NFIB Small Business Economic Trends report for August 2024, authored by William C. Dunkelberg and Holly Wade, highlights growing concerns among small business owners as optimism declined by 2.5 points to an index value of 91.2, marking the 32nd consecutive month below the long-term average of 98. Uncertainty about future business conditions, inflation, and declining sales expectations were key factors behind this pessimism.

Sales expectations plummeted, with a net negative 18% of owners predicting higher real sales, contributing significantly to the drop in optimism. Profit trends also hit their lowest point since March 2010, with 37% of businesses reporting declines due to weaker sales and rising costs

Labor shortages persist, with 40% of businesses reporting unfilled positions, largely due to a lack of qualified applicants. In response, many businesses plan to raise compensation over the next three months.

While businesses continue to invest in capital, uncertainty about future conditions remains high, as reflected in the Uncertainty Index rising to 92.

Key takeaways from the report include:

1. Inflation and Cost Pressures: Inflation remained the top issue for 24% of business owners, affecting various sectors, with the most price hikes in finance, retail, construction, and manufacturing. Though slightly down from July, businesses continue to face high input and labor costs.
2. Sales and Profit Trends: The report showed that small business owners expect weaker sales, with a net negative 18% anticipating higher real sales volumes. Additionally, 37% reported a drop in profit trends, the lowest since 2010.
3. Labor Market Challenges: Forty percent of owners reported job openings they could not fill, particularly for skilled labor. Labor quality and costs continue to be significant concerns, with 21% citing labor quality as their top problem.
4. Compensation and Capital Spending: Despite inflationary pressures, a net 20% plan to raise compensation in the next three months. Business investment has remained relatively stable, with 56% reporting capital outlays in the last six months, primarily on new equipment and facility expansions.

These indicators reflect ongoing struggles among small businesses to manage rising costs and maintain profitability in a challenging economic environment. Continued uncertainty and inflation concerns weigh heavily on their outlook for the future. High inflation, declining sales, and a challenging labor market are weighing heavily on small business sentiment. While businesses continue to invest in equipment and raise wages to attract workers, the overall outlook remains cautious as uncertainty about future economic conditions increases.

For further details, you can refer to the full NFIB report here https://www.economicgreenfield.com/