Bidenflation Threatens Almost Half of Small Business Owners

A shuttered storefront in Cairo, Ill. / Getty Images
July 18, 2022

Almost half of small business owners said their businesses are on the brink of closing after inflation last month hit another record high.

report published Thursday by the Alignable Research Center found that 47 percent of small business owners say they may close by the fall, marking a 12-point increase from last summer, when only 35 percent of business owners said they were at risk. More than half, meanwhile, said they expect to make less money than they did last year.

More than 60 percent of respondents said inflation has damaged their business more than the COVID-19 pandemic, the report showed. Inflation shot up to 9.1 percent in June, according to the Bureau of Labor Statistics. Economists, including former Obama administration officials, have said President Joe Biden's nearly $2 trillion stimulus package contributed significantly to skyrocketing inflation.

Other causes of financial instability, respondents said, include increased gas prices, rent hikes, labor issues, the broken supply chain, reduced consumer spending, rising interest rates, fears of recession, and continued pandemic recovery.

Retailers, construction firms, and car dealerships were among the hardest hit small businesses. Half of restaurant owners said their businesses are in danger. Of small business owners in general, almost 60 percent agreed the summer of 2022 has been economically challenging.

"Small businesses do not like high inflation since it raises their costs and squeezes their profit margins," American Enterprise Institute senior fellow Desmond Lachman told the Washington Free Beacon. "This forces them to have to raise prices, which might be difficult to do both because they might get pushback from their consumers and because they might lose market share. The high degree of uncertainty associated with high inflation makes it difficult for small businesses to plan and operate."