US President Joe Biden delivers remarks on economic growth, employment and deficit reduction in the Roosevelt Room of the White House on May 4, 2022 in Washington, United States.
Evelyn Hockstein Reuters
Fewer small business owners than a year ago are endorsing the work Joe Biden is doing as president. According to the most recent CNBC|SurveyMonkey Small Business Survey, conducted April 18-25 among 2,027 small business owners in the United States, small business owners are twice as likely to dislike Biden as to endorse him
Biden’s approval rating in this group hasn’t changed over the past three quarters, but few small business owners have been particularly focused on politics during that time. Instead, inflation has dominated concerns on Main Street for the third straight quarter. In this latest survey, about four in 10 small business owners (38%) say inflation is the biggest risk facing their business right now, at least twice as many who put it down to supply chain disruptions (19%), labor shortages (13%) or Covid -19 (13%).
About three in four small business owners say they are currently facing rising material costs, a number that has remained steady since the fourth quarter of 2021.
40% of those facing rising costs say they need to raise their prices to keep up, and another 35% plan to raise their prices if their costs continue to rise.
However, that leaves 24% to absorb rising costs without raising prices themselves. As inflation rises across sectors, small companies may be the most reluctant to raise their own prices because they lack some of the pricing power that helps large companies maintain their dominance.
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One of the concerns about inflation is how quickly it can spiral out of control: as prices rise at each stage of production, they continue to drive prices higher at each subsequent stage. Additionally, as prices rise, companies are forced to raise wages, but those higher wages result in consumers having more money to spend, and the cycle continues.
But you won’t see much acceptance of price gouging on Main Street. Small business owners seem particularly reluctant to take advantage of the current inflationary environment by passing higher costs on to their customers. Overall, twice as many small business owners say now is a bad time to raise prices than they say now is a good time to raise prices.
Obviously, small business owners can’t fight inflation alone; It is squarely within the purview of the Federal Reserve and Biden administration to make policy changes that can curb widespread price hikes. So far, few on Main Street have been impressed with the response.
This quarter, just 27% of small business owners say they trust the Federal Reserve’s ability to control inflation, almost exactly the same as last quarter’s 28%. On Wednesday, Chairman Jerome Powell announced that the Fed would raise interest rates by half a percentage point – the first such move since the latest surge in inflation began last year.
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Not coincidentally, small business owners’ approval of the way Joe Biden is doing his job as president plummeted just as inflation began to rise last fall — and has stayed there ever since. During the first three quarters of his presidency, Biden averaged a 42% approval rating for small businesses: not great, but not terrible considering the majority of small business owners are Republican rather than Democrats.
Over the past three quarters, Biden’s approval rating has fallen to the low 30s, and fewer small business owners than ever are agreeing with Biden. Other polls suggest Biden needs to get inflation under control to shore up his lagging job admissions.
Similar to our quarterly survey, Biden’s approval in general opinion polls began to decline last fall as inflation began to rise. The FiveThirtyEight tracker for presidential approval shows August 29, 2021 as the tipping point where Biden’s disapproval outpaced his approval in poll averages. Even then, the speed of price increases broke records.
In a new Washington Post and ABC News poll, Biden’s job approval rose slightly from February to April and now stands at 42% overall. That number is still well below the 52 percent mark Biden had in the first Washington Post/ABC News poll during his presidency in April last year.
This latest poll is particularly prescriptive for Biden as it asked about various aspects of the president’s approval. Though his overall approval rating is underwater, a majority of US adults (51%) support Biden’s handling of the coronavirus pandemic. Fewer approve of his handling of the Russia/Ukraine situation, his ability to create jobs, or his handling of the economy in general. And at the bottom of the list, just 28% agree with its handling of inflation.
Presidents are lauded for a strong economy in good times and blamed for a flagging economy in bad times, as Biden is now witnessing. With inflation ranked first across the country, including on Main Street, Biden’s job permit won’t recover unless he takes it.