Small-business owners increasingly are worried about inflation as their outlook on the economy has declined to its lowest level 17 years, according to the head of the National Federation of Independent Business.
“It’s clear that we are in or are about to enter a recession,” Todd Stottlemyer, president of the NFIB, told the Virginia Council of CEOs yesterday during a speech at The Jefferson Hotel in Richmond.
The NFIB’s Index of Small Business Optimism fell 2.8 points in January to 91.8, the lowest level since January 1991, a recessionary period during the first Persian Gulf War. (The index is pegged to a value of 100 points set in 1986.)
Meanwhile, the share of survey respondents citing inflation as their chief concern has risen to 8 percent, double the percentage a year ago and the highest level recorded by the index since the 1980s.
Stottlemyer noted that rising inflation is affecting a wide range of commodities including oil. He predicted that the average price of gasoline at the pump will reach $4 by Memorial Day.
Ironically, attempts by the Federal Reserve System to boost the economy is fueling inflation, Stottlemyer said. He noted that the central banks of other major industrialized nations have refused to follow the Fed’s example on recent cuts in interest rates. The NFIB surveys reveal that the percentage of business owners expecting the economy to improve has dropped with each rate cut since Sept. 18.
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