A report from a small business association showed businesses are slightly more optimistic than they were a few months ago, but many still have concerns about the future and some Virginia industries have economic concerns.
According to a national report issued by the National Federation of Independent Business, optimism from small businesses increased by one-fifth of a percentage point to 98.4%. Still, only four of the 10 index components improved, four declined and two were unchanged.
The survey showed that only 38% of business owners predict that conditions will improve in the next six months, which is one point lower than a month ago. It declined 18 points over the past four months and was at the lowest point in nearly a decade. About 59% of owners are increasing prices, which is six points higher than last month and the highest since former President Jimmy Carter was in office.
About 54% of business owners plan more price hikes, which is three points higher than last month and the highest in nearly five decades. About 48% of business owners reported that they have job openings that cannot be filled, which is one point lower than last month.
The percent of businesses that reported inventory increases rose by 3%, but 35% of businesses reported that supply chain disruptions have a significant impact on their business, 31% reported it has a moderate impact and 22% reported it has a mild impact, with only 9% reporting no impact.
Although the report does not break down the numbers by state, NFIB Virginia Director Nicole Riley said in a statement that businesses that the organization represents in the commonwealth have had similar issues.
“Our members here in the commonwealth believe that issues such as labor and disruptions in the supply chain will continue to affect their small businesses in the coming year,” Riley said.
A lot of restaurants, hotels and travel-focused businesses are also concerned about the economic outlook, according to Robert Melvin, the director of government affairs at the Virginia Restaurant, Lodging & Travel Association.
Melvin told The Center Square restaurants are being hurt by supply chain disruptions, high inflation rates and concerns surrounding the omicron COVID-19 variant. Many of these businesses, which he said needed to take out loans to stay afloat during the pandemic, do not expect to fully recover until 2023 or 2024. He said restaurant, lodging and travel industries were the first to feel the brunt of the pandemic and will be the last to recover.
Inflation has caused food prices to increase, particularly extraordinarily high prices for crab meat and chicken wings. Some places that normally sell Buffalo chicken wings have started offering chicken thighs because wing prices have increased too much. A lot of restaurants have been forced to shorten operating hours and close certain days of the week because of labor shortages and some hotels aren’t able to rent out all of their rooms because they can’t afford staff to clean every room, he added. He also said some hotels are unable to purchase supplies wholesale and need to buy as much supplies as they can from retail stores to curb shortages.
“I’m not going to say that there’s not optimism [but it’s] not a rosy picture for our industry,” Melvin said.
Melvin also expressed some skepticism with Gov. Ralph Northam’s proposed two-year budget. Although he said the tax relief in the plan will help by putting more money in people’s pockets, he said there’s no relief for the industries that are continuing to struggle in this economic environment.
Inflation has reached nearly 7% over the year, so far.
This article was originally posted on Many Virginia businesses still have economic concerns, but national optimism slightly higher