National Federation of Independent Business (NFIB) Chief Economist Bill Dunkelberg said "uncertainty among small business owners continues to rise" as inflationary pressures continue.
“The mood on Main Street worsened in August, despite last month’s gains," Dunkelberg said in a press release. "Historically high inflation remains the top issue for owners as sales expectations plummet and cost pressures increase. Uncertainty among small business owners continues to rise as expectations for future business conditions worsen.”
The latest NFIB Small Business Economic Trends report, known as the Optimism Index, shows that small businesses have been below the 50-year average for 32 consecutive months. High inflation and declining sales expectations are the top concerns, with a net negative 37% reporting profit losses, the worst since 2010.
Tim Taylor of NFIB California urged Congress to pass the Main Street Tax Certainty Act and calls on Governor Newsom to veto regulatory bills impacting small businesses, according to a press release from the NFIB. Dunkelberg highlighted rising uncertainty among business owners, with inflation remaining the biggest challenge. Additionally, 70% of small business owners report being affected by supply chain disruptions across key sectors.
California's poverty rate surged to 18.9% in 2023, up from 16.4% in 2022, with 7.3 million residents unable to meet basic needs, the California Budget & Policy Center reported. Black, Latinx, and other communities of color faced disproportionate hardship, reflecting long-standing structural inequities. The poverty increase follows the expiration of pandemic-era relief programs like the expanded Child Tax Credit, Earned Income Tax Credit, and enhanced unemployment benefits. Income inequality is stark, with the richest 1% earning 67 times more than the bottom 20%.
A report by Marathon Strategies revealed that California ranked third in the U.S. for "nuclear verdicts" in 2023, with verdicts exceeding $10 million. The state saw 117 such verdicts totaling $25.23 billion, largely due to its "liability-friendly laws and courts." A notable case involved a $161 million verdict against Suzuki Motor in a vehicle accident lawsuit.
According to a February 1, 2024 editorial in CalMatters, California has the highest poverty rate in the U.S., driven by its high cost of living, partially due to excessive litigation that raises insurance costs. The average Californian household spends over $53,000 annually on necessities, and nearly one-third of residents live in or near poverty.
William Dunkelberg, Chief Economist for the National Federation of Independent Business since 1971, is an expert on small business, entrepreneurship, and government policy. He is Professor Emeritus of Economics at Temple University’s School of Business, where he also served as Dean and Director of the Center for Entrepreneurship. Dunkelberg has held positions at Purdue, Stanford, and the University of Michigan and has served as an adviser to the U.S. Secretary of Commerce. He holds a B.A., M.A., and Ph.D. in Economics from the University of Michigan.