More than half of American small business owners believe the economy is already in recessionmarking a slight decline for July from April, despite the fact that most companies reported that their own financial situation was strong, a survey published on Monday showed.
The July survey by the National Federation of Independent Business focused primarily on the views of small firms on the state of banking and their credit needs, and also showed that small businesses are much less concerned about the health of their bank than they were immediately after the bankruptcies of financial institutions, including Silicon Valley Bank.
As for the economy, 52% of small business owners believe the economy is already in recession, up from 55% in April, according to the survey.
This belief comes despite broad signs of strength in the economy and mounting evidence that a long-anticipated recession could be avoided.
Recent indicators have shown strong growth in retail sales and spending on services, the two largest sectors of activity for small businesses.
In addition, the companies consider their own financial situation to be sound and their local economies relatively healthy.
For example, more than two-thirds of all companies stated that the financial status of the business was “excellent” either “Well”a slight decline from April, but still strong, as consumer spending continues to exceed expectations, and the outlook for Gross Domestic Product expansion for the third quarter continues to be revised upwards.
In addition, 80% of the firms said that the local economy was at least “good”.
Optimism about the banking sector also improved, reeling from the second-biggest US banking collapse on record in March, as more than half of owners were not at all concerned about the health of their bank, an increase from 31 % in April.
Concern among small businesses increased at the onset of the crash, as 80% of all small businesses use a small, medium or regional bank for their financial needs.
The rising cost of borrowing following the Federal Reserve’s 525 basis point interest rate hikes since March 2022 remained the biggest source of concern for most companies that have borrowed or attempted to borrow since. April.
Source: Reuters
Source: Gestion
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