Small Businesses Quip 'What Recession?' Amid Rising Confidence Despite Economic Challenges

U.S. small businesses are more confident in the economic landscape, underscored by a seven-month peak in June, per the latest data from the National Federation of Independent Business (NFIB).

The upward trend comes despite inflation and labor quality remaining top concerns for small business owners.

The NFIB’s Small Business Optimism Index rose 1.6 points in June to 91 — the highest monthly jump since August 2022. The figure is still below the 49-year average of 98, marking 18 consecutive months of subdued confidence levels.

"Inflation and labor shortages continue to be great challenges for small businesses," NFIB Chief Economist Bill Dunkelberg said. "Owners are still raising selling prices at an inflationary level to try to pass on higher inventory, labor, and energy costs."

Yet, there are signs of resilience and optimism. About 42% of owners reported job vacancies that were challenging to fill. That’s a slight drop from the previous month, but still at a historically high level.

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The outlook for business conditions over the next six months also showed improvement. Small business owners expressed a less negative view than in previous months.

Comerica Bank's Chief Economist Bill Adams told Benzinga, “Small business outlook looks less glum after debt ceiling deal and inflation easing; entrepreneurship is booming despite weak small business sentiment.”

Adams continued to highlight the emerging strength of entrepreneurship. While established small businesses grapple with current challenges, there’s been a surge in the formation of new ones, he added.

“A silver lining is that, while incumbent small businesses are having a tough time, entrepreneurship is booming and new small businesses are forming at a historically rapid pace,” he said.

As small businesses defend against economic challenges, the question remains how they will continue to adjust to the evolving market conditions, especially in light of the predicted "higher for longer" interest rate environment handled by the Federal Reserve.

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