More than 80% of Small Businesses expect a recession this year: CNBC|SurveyMonkey
Q2 2022 Small Business Confidence Index increases slightly to a score of 46, three points higher than all-time low of 43 in Q1 2021
ENGLEWOOD CLIFFS, N.J. and SAN MATEO, CA, May 5, 2022 — CNBC, First in Business Worldwide, and Momentive, maker of SurveyMonkey and a leader in agile experience management, today announced the results of their quarterly CNBC|SurveyMonkey Small Business Survey.
The second quarter survey finds more than 8 in 10 small business owners (81%) expect the U.S. economy to go into recession this year as the Federal Reserve raises interest rates in its effort to reduce a persistently high rate of inflation. Seventy percent of small business owners assume higher interest rates will have a negative effect on their businesses in the next 6 months, which is potentially a sign of why so many small business owners believe a recession is coming.
High inflation is also contributing to a dour economic outlook among small business owners. 44% of those surveyed rate the current state of the economy as “poor.” 31% rate it as “fair,” 18% rate it as “good” and 6% say it is “excellent.” 38% of small business owners surveyed say high inflation is the biggest concern facing their businesses right now, while 19% say supply chain disruptions, one of the root causes contributing to inflation, is the biggest concern they are facing.
Despite the weak outlook, the Small Business Confidence Index sits at 46 in the second quarter, a slight upward tick from last quarter and now the highest it’s been since President Biden took office. This survey, which was conducted April 18-25, 2022, finds that thirty-six percent of small business owners describe business conditions as “good,” up from 33% last quarter, and fewer small business owners expect changes in tax policy and regulatory policy to have a negative impact on their businesses in the next 12 months. This marks the seventh straight quarter the index has languished below 50, indicating more small business owners are pessimistic rather than optimistic. It’s now 16 points below the all-time high of 62 from Q3 2018.
“High inflation, climbing interest rates, and supply chain squeezes combine to give small business owners a clearly pessimistic outlook on the economy,” said Jon Cohen, Chief Research Officer at Momentive. “But some signs of cautious optimism also shine through, buoying overall small business confidence ahead of summer.”
Each quarter, CNBC and SurveyMonkey poll over 2,000 small business owners aiming to measure the vitality of the American economy as well as the view from Main Street on jobs, taxes, and other hot topics. In addition to measuring small business confidence nationwide, the large sample size gives CNBC and SurveyMonkey the power to uncover trends by geographic region and among specific small business cohorts.
Additional key findings from the Q2 2022 CNBC|SurveyMonkey Small Business Survey include:
Inflation is high but fewer small business owners are raising prices
- 35% of small business owners say now is a “bad time” for businesses to raise prices.
- 17% say it’s a “good time” to raise prices.
- 75% of small business owners say they are currently experiencing rising costs of supplies, on par with the previous two quarters.
- Among those experiencing rising costs, 40% say they are raising prices because of higher input costs, down from 47% in the first quarter. 24% say they are absorbing higher costs.
Confidence in President Biden and the Federal Reserve among small business owners remains low:
- Just 27% of small business owners are confident in the Federal Reserve’s ability to control inflation, while 72% are not confident. Both of these numbers are virtually unchanged from last quarter.
- 13% of Republicans, 25% of independents, and 58% of Democrats are very or somewhat confident in the Federal Reserve’s ability to control inflation.
- Among those who approve of the job Joe Biden is doing as president, 63% express confidence in the Fed. Among those who do not approve of Biden, just 9% express confidence in the Fed.
- Overall, 67% of Small Business owners disapprove of President Biden’s job performance. That is unchanged from the first quarter.
Despite the potential threat from Russia, cybersecurity continues to be of little concern:
- Only 5% of small business owners report cybersecurity as the biggest risk to their business now, exactly the same as in Q1 2022.
- 61% of small business owners say they are not concerned they will be the victim of a cyber-attack in the next year, on par with Q1 2022.
- 62% are confident in their ability to resolve a cyber-attack on their business quickly, but only 34% say they have a set plan they would follow in the event of an attack.
CNBC Small Business Reporter Kate Rogers will reveal the results of the CNBC|SurveyMonkey Small Business Survey today, Thursday, May 5th throughout CNBC’s Business Day programming. For more information on the survey including the full results and methodology and in-depth articles, go to: https://www.surveymonkey.com/curiosity/cnbc-small-business-q2-2022/.
Momentive created a unique Small Business Confidence Index (SBCI), which is a 100-point score based on responses to eight key questions. The index is calculated on a scale from 0–100 and is based on the responses to eight key questions. A zero indicates no confidence, and a score of 100 indicates perfect confidence. The second quarter of 2022′s SBCI has increased to an overall value of 46 from 44 in the first quarter.
This CNBC|SurveyMonkey online poll was conducted April 18-25, 2022 among a national sample of 2,027 self-identified small business owners ages 18 and up. This quarter, we also reached 9,436 individuals who do not own small businesses. Respondents for this survey were selected from the more than 2 million people who take surveys on the SurveyMonkey platform each day. The modeled error estimate for this survey is plus or minus 3.5 percentage points for the results among small business owners and 1.5 percentage points for results among those who do not own small businesses.
Data for small business statistics have been weighted according to business characteristics (industry and number of employees) according to the Small Business Administration’s 2013 Statistics of U.S. Businesses. Additionally, person-level data (age, gender, level of education, race, geography) for business owners have been weighted to the Census Bureau’s 2012 Survey of Business Owners.
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Momentive (NASDAQ: MNTV—maker of SurveyMonkey) is a leader in agile experience management, delivering powerful, purpose-built solutions that bring together the best parts of humanity and technology to redefine AI. Momentive products, including SurveyMonkey and Momentive brand and market insights solutions, empower decision-makers at 345,000 organizations worldwide to shape exceptional experiences. Millions of users rely on Momentive to fuel market insights, brand insights, employee experience, customer experience, and product experience. Ultimately, the company’s vision is to raise the bar for human experiences by amplifying individual voices. Learn more at momentive.ai.