The October release of the Freedom Economy Index has arrived, and this month, the concern over a future “major” recession has eased somewhat but remained elevated from mid-summer. The findings offer a boots-on-the-ground view of business, politics and society providing unique insight on trends in the US at large.
The monthly survey of over 70,000 small business owners, which is a joint project of PublicSquare and RedBalloon.work, also found that employers continue to anticipate a “difficult” recession in the coming 6 months.
“There’s a lot of hunkering down taking place among the small business community,” said Andrew Crapuchettes, CEO of RedBalloon.work. “It’s remarkable that, with all the evidence of a people shortage, that 68% of these businesses are now saying they are neither hiring nor reducing staff.”
Supplier price increases are also negatively impacting small businesses and the consumer. 76% of Freedom Economy small businesses say that their supplier prices have increased over the past 30 days. 35% say their supplier prices have increased by 20% or more in the past 12 months, much higher than the Producer Price Index’s annualized rate of 2.2% as of September 2023.
“Inflation is hitting small businesses the hardest,” said PublicSquare CEO Michael Seifert. “And their supplier cost increases are as much as 10 times greater than what the government is reporting.”
The burden of increased supplier prices is being passed on to consumers, with 75% of these businesses choosing to pass part or all these cost increases on to their customer base.
Small businesses blame the inflation spike on bad government policy, both in spending and in delayed reaction from the Federal Reserve.
Verbatim responses included “There are only so many ways to stretch a dollar when the cost of everything is skyrocketing,” and “Hyperinflation is possible for the first time in the USA.”
Government-caused hardships have been adding up over the past 4 years, including COVID pandemic government mandated lockdowns, supply chain crisis, people shortage due to job seekers staying on the sidelines living on government subsidies, and now rampant inflation.
It’s no wonder these business owners no longer trust the government to provide solutions.
80% of these respondents believe the Federal Reserve is purposely trying to create a recession, “even if it means people will lose their jobs and businesses.”
And when asked which party they trust to put America back on track, 66% responded with “Neither.”
Over half of these businesses say their business would benefit most if congress simply shut down for a year, went home, and passed no new spending or legislation.
Small businesses are adopting AI to deal with aggressive wage inflation. While 67.7% of small businesses do not anticipate using artificial intelligence (AI) to produce goods and services in the coming six months, over 1-in-5 of these respondents would consider exploring AI to replace staffing positions if there is a 25-dollar minimum wage in their state.
There is a misalignment between the workers colleges are producing and the workers employers are asking for. 67% of small business owners responded with a resounding "strongly no" when asked if colleges and universities are graduating students with relevant skills that today's business community needs.
Additionally, when asked whether they'd prefer a job seeker who has just completed a 4-year degree or someone without a degree but with four years of industry experience, 86% favored the job seeker with industry experience over the degree holder.
Verbatim responses to a question asking specifically about whether these students are ready for a real job included, “In a broader sense no, but there are some good ones out there,” and “Absolutely not, what a waste and I am a former college graduate.”
"The recessionary fears are far from unsubstantiated. High-interest rates and doubts in our leadership's economic strategies are keeping small business owners up at night,” Michael Seifert, PublicSquare CEO, said. “In fact, poor economic policy decisions, like raising minimum wage to $25 per hour, is forcing the hand of small business owners to rely on AI instead of creating jobs for people.”
"Small businesses are clearly favoring experience over degrees,” Andrew Crapuchettes, RedBalloon CEO, said. “The education system's failure to produce job-ready graduates is a pressing concern that must be addressed to ensure a more aligned workforce.”
The message of this latest Freedom Economy Index is clear: America’s small business community, and America at large, have lost faith in establishment intentions and products at all levels. Government, corporations, and education have no longer earned the trust of the American people.
But the silver lining in the clouds is that there are now alternatives to the institutions that for so long had monopoly on America’s dollars. Through the booming Freedom Economy, Americans can now rely on themselves and each other to build new businesses, public squares, and workplaces – free to work and purchase with those who share their values.
Download the full October report here.
Methodology:
The October 2023 Freedom Economy survey sampled a universe of over 70,000 small businesses from October 25-30, with 905 respondents and a 3% margin of error at the 95% confidence level.