(The Center Square) – Some small Virginia businesses are expressing pessimism about the future as the economy grapples with soaring inflation, record-high gas prices and an ongoing labor shortage.
The National Federation of Independent Business released a national survey, which shows the Small Business Optimism Index dropping by 3.6 points in June. This is the sixth straight month the numbers are below the 48-year average. Business optimism was at 89.5, which is more than eight points lower than the average of 98.
Although the survey does not list state-specific data, NFIB Virginia Director Julia Hammond told The Center Square that Virginia small businesses are reporting problems similar to the issues at the national level.
“Inflation and supply chain disruptions are global issues, and they’re clearly taking a toll on small businesses throughout the commonwealth,” Hammond said. “It’s been a rough couple of years for small businesses, and while owners may be determined to get through this, it’s clear from the survey they don’t think things will get much better anytime soon.”
According to the survey, the number of businesses that expect better conditions over the next six months went down by seven points to a net negative 61%. The NFIB noted that this was the lowest recorded number in the survey’s history and business expectations for better conditions have gone down every month this year.
More than one-third of businesses cited inflation as a top problem, which is the highest level since the tail end of 1980. The net percent of businesses that expect real sales to increase went down 13 points over the month to a net negative of 28%. Many businesses have also had problems finding qualified applicants. The survey found that 50% reported job openings they could not fill.
“There’s certainly concerning signs,” Robert Melvin, the director of government affairs at the Virginia Restaurant, Lodging & Travel Association, told The Center Square.
Melvin said his members have seen softening hotel occupancy, declines in people dining out and the cost of everything going up. He said inflation has been a serious issue and gas prices have hurt some businesses because people are traveling less. Although there’s pent up demand for travel with the pandemic winding down, he said it’s being cut into by inflation and high gas prices.
Businesses in his industry have also been held back by supply chain shortages and staffing shortages, Melvin said. He noted that the concerns come from a lot of these issues coming together.
Melvin said the VRLTA asked lawmakers for more relief and for more workforce development funding, but that their concerns were not prioritized in the state budget.
As of the most recent numbers, inflation has gone up to 9.1% nationally and the average cost for a gallon of gas in the commonwealth is nearly $4.42.
