October 11, 2022


Small business optimism rose 0.3 point in September to 92.1 after having climbed 1.9 points in August and 0.4 point in July.

NFIB Chief Economist William Dunkelberg said, “Inflation and worker shortages continue to be the hardest challenges facing small business owners.  Even with these challenges, owners are still seeking opportunities to grow their business in the current period.”

The NFIB noted that 46% of owners reported job openings that could not be filled (versus 49% in August).    45% of owners raised worker compensation in September (versus 46%), and 51% raised prices (versus 53%).  Labor costs and labor quality were significant problems for the group.

Certainly the demand side of the economy has slowed in recent months.  However, business people are still hiring as quickly as they can..  Consumers are also awash with available cash and continue to spend at a moderate pace.  The housing sector has been hit by the combination of  higher mortgage rates and higher home prices,  but homes still sell in a near-record short period of time.  Ditto for the manufacturing sector which still cannot keep pace with the inflow of orders.  The economy may slow as the Fed accelerates the pace of rate hikes but real rates will remain negative for the foreseeable future.

For the past couple of years a shortage of chips has hindered the pace of car sales and caused used car prices to surge.  Transportation delays at ports, and amongst truckers and warehouse workers is delaying delivery of almost everything.  That problem created a headwind on GDP growth in 2021 but now the situation seems to be improving slightly.  There are still delays in receiving required materials, but the problem is less acute than it was at this time last year.

We expect to see 1.0-1.5% GDP growth in the final two quarters of this year and 1.0% GDP growth in 2023.

When demand exceeds supply prices rise.  The CPI is expected to rise 7.1% in 2022 while the core CPI (excluding food and energy prices) should increase by 6.0%.

Stephen Slifer


Charleston, SC