More than half of US small business owners believe the economy is already in a recession, marking a slight decrease between July and April, despite most firms reporting their own financial condition was strong, a survey released on Monday showed.
The survey conducted in July from the National Federation of Independent Business focused mainly on small businesses’ views on the state of banking and their credit needs, and also showed small businesses are much less worried about the health of their bank than they were in the immediate aftermath of this spring’s bank failures, including that of Silicon Valley Bank.
On the economy, 52 percent of small business owners said they believe the economy is already in a recession, down from 55 percent in April, the survey found. That belief comes despite broad signs of strength across the economy and growing body of evidence that the economy could avoid a long-anticipated downturn.
Recent indicators have shown strong retail sales and rising spending on services, the two largest small business industries. Moreover, businesses see their own financial condition as strong and their local economies relatively healthy.
For instance, more than two-thirds of all firms said that the financial state of business was “excellent” or “good,” a slight decline since April, but still strong as consumer spending continues to surpass expectations, and expectations for third-quarter gross domestic product growth continues to get revised upwards. On top of that, 80 percent of firms reported that the local economy was at least “okay.”
Optimism about the banking sector improved as well, recovering from the second-biggest US banking collapse on record in March, as over half of all owners were not at all concerned about the health of their bank, an increase from 31 percent in April. There was heightened concern among small businesses at the outset of the collapse since 80 percent of all small businesses use a small, mid-sized or regional bank for financial needs.
The increased cost of borrowing after 525-basis points worth of tightening from the Federal Reserve since March 2022 continued to be the greatest source of concern for the majority of firms that have borrowed or tried to borrow since April.
Meanwhile, American workers’ expectations for pay surged in July, even as those same workers foresee a modestly less robust job market, said a survey released Monday by the Federal Reserve Bank of New York.
Respondents told the bank that they’d expect an annual salary offer of $67,416 upon being offered a job, a record reading in a survey that started in 2014, up from the $60,310 reported a year ago. “The increase was broad-based across age, education, and income groups, but was most pronounced for respondents above age 45 and for college graduates,” the report said.
Respondents to the bank’s Survey of Consumer Expectations said that the lowest wage they’d accept to take a job also jumped, hitting a record $78,645, from $72,873 a year ago.
The pay workers are expecting was not from what they’re actually getting. The survey said that survey respondents said that in July the average wage offered for a full-time job was $69,475 versus $60,764 in July 2022.
The jump in compensation, actual and expected, came even as poll respondents saw some softening around the edges of the job market. The survey found that relative to a year ago there’s been a small decline in those who said they’d changed jobs, as well as a reduction in the number of people who said they were searching for new work.
Looking ahead, respondents said the probability of them moving to a new employer stood at 10.6 percent , down from 11 percent in the July 2022 survey. Respondents also said they see the chances of receiving a job offer in the next four months as lower. – Reuters
