Why are businesses pessimistic about the economy?
Why are businesses pessimistic about the economy?
On Monday, we reported about how consumers are feeling, which is, all in all, pretty positive. Now, we turn to how businesses are feeling. And boy, is the story different there.
The National Federation of Independent Business’ Small Business Optimism Index came out Tuesday morning. It says that in August, for the 20th straight month, business owners scored their outlook below average. In other words, they’re mostly pessimistic about the future.
Do you know anyone who makes crushed sandwich cookies? Cause Judy Herrell’s looking for suppliers.
“I’ve tried every distributor from here to Timbuktu,” she said.
Herrell needs them for her ice cream shop in Northampton, Massachusetts. She says she’s still dealing with supply chain issues. So she’s been driving nearly two hours — each way — to pick up cookies from the closest producer.
Another item on her list? Black raspberries, a key ingredient in many of her signature flavors. A few years ago, they cost about $2,000.
“This year it was over $6,000. We’re talking about berries,” Herrell said.
Prices have also gone up for milk. And it’s not like she can just do without it.
This is a key example of why consumers and businesses are experiencing inflation differently. Because they’re experiencing different slices of it.
“So it depends what people are really buying,” said David Audretsch, a professor of entrepreneurship at Indiana University.
He said businesses require specific goods and can’t pivot as fast as consumers. Plus, consumers don’t have to worry about the thing that businesses spend a lot of their money on.
“You know most of them, labor is a big part of their bill,” Audretsch said.
That is … if they can hire. Erin Calvo-Bacci, who owns CB Stuffer, a wholesale and retail candy company, is down 10 employees. She said a lot of job candidates can’t find child care.
“So I’m just working a lot more, which is fine because that’s what I signed up for. It’s just, there’s only so much that I can do myself,” Calvo-Bacci said.
On the upside, business is good.
“Every week we are gaining new accounts,” she said. “The problem is the slower turnaround in getting that product out means a slower turnaround with getting paid.”
Calvo-Bacci said she’s tired of the slog. The pandemic upended everything for businesses more than three years ago. And by now, she expected things to feel a little easier.
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