The governmental shutdown seems to be nearing its end just in time for small businesses across the country. These businesses have reported an increase in hiring woes, slower sales, and dwindling profits during the work stoppage period, as shown in a survey closely observed by business owners. The National Federation of Independent Business (NFIB) said about the shutdown, “By the close of the year, we expect to see a resolution; the sooner, the better. Until then, our economic indicators will depict sluggish economic growth projections, slowing sales, and tepid job growth. Owners are resilient, but the experience won't be enjoyable until the shutdown concludes and the government resumes business.”
In October, the NFIB Small Business Index fell slightly, marking its second consecutive monthly decline and hovering just above the survey’s average for the past 52 years. This is its lowest score since April’s tariffs were announced. As small businesses account for a solid slice of the U.S. economy, potentially up to 60% of new job creation, the sentiments and experiences of small business owners matter. They can significantly influence hiring processes and overall economic conditions. This feedback comes when the U.S. government shutdown has entered its 42nd day, casting a shadow over economic data and straining the nation’s air travel system.
Despite certain economic indicators looking more promising than before the 2024 election, obstacles like a deficit of qualified labor not to mention declining sales and profits have seemed to drag down economic expectations, according to Wells Fargo economists Jackie Benson and Ali Hajibeigi. A significant majority of owners reported a struggle in finding qualified employees for available positions. Poor labor quality was identified as the main problem faced by small business owners, particularly in the construction sector, where almost 50% of owners report jobs that they weren’t able to fill.
The number of owners recording higher sales plummeted by six points in October, while those registering higher profits fell by nine points. Feedback incorporated in the report revealed that the burden of health insurance costs was increasingly problematic. However, on a brighter note, the number of businesses predicting an upturn in sales remained positive. Anticipated capital expenditure hit peak figures for the year.
According to the survey, the economic climate appeared steadier in October. The uncertainty index decreased 12 points, hitting its annual lowest at 88, amid a year filled with tariff-related doubts and other business environmental changes. Small businesses were experiencing a cooling of inflation, as the survey portrayed a decline in the number of owners who had raised their prices in October or who planned to do so in the subsequent three months.