Many big public companies are likely to report strong second-quarter profits, but that isn’t the story on Main Street, where small businesses are grappling with jittery customers, rising costs and tight credit.
The owners of many small businesses say economic uncertainty and inflationary pressures have led them to delay hiring and capital expenditures. Seventy percent have no plans to expand their staffs over the next 12 months, according to a recent U.S. Bancorp survey of 1,004 U.S. companies with annual revenue of $10 million or less.
While about half projected higher revenue a year from now, 78% said the U.S. economy is still in a recession, and many expected it to remain there next year. In May, for the third month in a row, the optimism index of the National Federation of Independent Business declined.
At big public companies, cost-cutting and a rebound in sales, particularly overseas, have provided a boost. But because small businesses account for more than half of private-sector employment and gross domestic product, their owners’ caution bodes ill for the broader economic recovery.
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