U.S. small businesses have been plagued by the sting of persistently high inflation, with experts predicting little relief from high prices in the near term in an increasingly fraught economic climate with recession and stagflation fears on the rise.
Nearly half (49 percent) said they were very concerned about inflation, which is up from 44 percent in the first quarter and 31 percent in the fourth quarter of last year.
‘Plagued by Rising Prices’The Chamber of Commerce report dovetails with recent data from the National Federation of Independent Business (NFIB).
“With inflation reaching a near 40-year high, small businesses continue to be plagued by rising prices with little hope for relief on the horizon,” NFIB Vice President of Federal Government Relations Kevin Kuhlman said in a statement. “As recent data shows, inflation remains the top problem for one-third of small business owners, has a direct impact on small business optimism, which is at a near 50-year low, and continues to harm the small business recovery.”
Kuhlman cited data showing that 62 percent of small-business employers said inflation was having a major impact on their business.
‘Things Will Get Much Worse Before They Get Better’Even though the prevailing narrative has shifted somewhat from inflation to the potential for a recessionary downturn, experts say price pressures are likely to stick around for longer in a dismal spell of stagflation.
“‘Team Persistent’ won, and ‘Team Transitory’—which previously included most central banks and fiscal authorities—must admit to having been mistaken,” he said.
Roubini expects what he calls a “stagflationary debt crisis,” as persistently high inflation forces central banks to keep monetary settings tight despite signs of a rolling over economy, “thereby increasing the probability of a synchronized global recession.”
“But because the next recession will be stagflationary and accompanied by a financial crisis, the crash in equity markets could be closer to 50 percent,” he wrote. “Things will get much worse before they get better.”