Small businesses across the United States are feeling the impact of high fuel costs, with many owners raising prices and reducing investment in their companies. According to the National Federation of Independent Business (NFIB), the recent surge in fuel costs has led to a decline in profits and an increase in pessimism among small business owners.

Impact on Small Businesses

The NFIB’s monthly Small Business Economic Trends report shows that the initial impact of the fuel price increase came in two forms: profits and pessimism. The profit metric fell 11 percentage points as businesses suddenly faced higher costs amidst stable revenue. The two sentiment-focused measures also dropped a combined 11 percentage points.

In the following months, small business owners shifted in response to the price shock. Profits rebounded, but pessimism worsened, with the two sentiment components down another combined 11 percentage points. The reason for the rebound in profits was clear: more price increases. The metric for actual price increases increased, and planned price increases were up.

The data also showed that pessimism was beginning to transform into reduced investment. The sentiment indicators were flat, maintaining the low levels they had fallen to in April. Profits were up again, back to within a point of where they were in February. However, when small business owners are pessimistic, they hesitate to invest. The data showed a decline in the percent of owners with current job openings and a decline in the percent of owners planning to increase employment.

Original reporting: NFIB (National Federation of Independent Business) — read the source article.