US President Joe Biden makes remarks about economic growth, jobs and deficit reduction in the Roosevelt Room at the White House in Washington, US, May 4, 2022.
Evelyn Hockstein | Reuters
Fewer small business owners than a year ago approve of the work Joe Biden is doing as president. According to the latest CNBC|SurveyMonkey Small Business Survey, conducted April 18-25 of 2,027 small business owners in the US, small business owners are twice as likely to disapprove of Biden than to approve.
Biden’s endorsement among this group has not waned in the past three quarters, but few small business owners have been particularly focused on politics during that time. Instead, inflation dominates Main Street for the third straight quarter. In this latest survey, about four in ten small business owners (38%) say inflation is currently the biggest risk to their business, at least double the number indicating supply chain disruptions (19%), labor shortages ( 13%), or Covid-19 (13%).
About three in four small business owners say they are currently experiencing rising costs for supplies, a number that has remained stable since the fourth quarter of 2021.
Of those experiencing rising costs, 40% say they need to increase their prices to keep up, and another 35% plan to increase their prices if their costs continue to rise.
Yet 24% remains to absorb the rising costs without raising prices themselves. With inflation rising in every sector, small businesses may be the most reluctant to raise their own prices because they lack some of the pricing power that helps large companies maintain their dominance.
One of the concerns about inflation is how quickly it can spiral out of control: as prices rise at each stage of production, they push prices further up in each subsequent stage. In addition, when prices rise, companies are forced to raise wages, but those higher wages mean consumers can spend more money, and the cycle continues.
But you won’t see much price gouging acceptance on Main Street. Small business owners seem especially reluctant to take advantage of the current inflationary environment by passing on higher costs to their customers. Overall, twice as many small business owners say now is a bad time to raise prices than now is a good time to raise prices.
Clearly, small business owners cannot fight inflation alone; it is entirely up to the Federal Reserve and the Biden administration to enact policy changes that could contain the widespread price hikes. So far, few people on Main Street have been impressed by the response.
This quarter, only 27% of small business owners say they are confident in the Federal Reserve’s ability to contain inflation, almost exactly the same as the 28% of the previous quarter. On Wednesday, Chairman Jerome Powell announced that the Fed would raise interest rates by half a percentage point — the first step since the recent wave of inflation began last year.
Not coincidentally, just as inflation started to pick up last fall, small business owners’ approval for how Joe Biden does his job as president dropped — and has remained so ever since. For the first three quarters of his presidency, Biden averaged a 42% small business approval rating: not great, but not terrible when you consider that a majority of small business owners align more with the Republican Party than with the Democrats.
Over the past three quarters, Biden’s approval rating has fallen to the low 30, and fewer small business owners are now approving Biden than ever before. Other polls suggest Biden needs to get inflation under control to bolster his lagging approval of his job.
As in our quarterly survey, Biden’s approval in general opinion polls began to fall last fall, just as inflation was beginning to rise. The FiveThirtyEight presidential approval tracker pins August 29, 2021 as the inflection point when Biden’s disapproval surpassed his approval in poll averages. Even at that time, the pace at which prices rose was breaking records.
In a new poll by the Washington Post and ABC News, the approval of Biden’s job rose slightly from February to April and now stands at 42% overall. That number is still well below the 52% high that Biden had in the first Washington Post/ABC News poll of his presidency in April last year.
This latest poll is particularly prescriptive for Biden as it asked about various aspects of presidential approval. While his overall approval rating is under water, a majority of adults in the US (51%) approve of Biden’s handling of the coronavirus pandemic. Less appreciate his approach to the situation between Russia and Ukraine, his ability to create jobs or his approach to the economy in general. And at the very bottom of the list, only 28% approve of its way of dealing with inflation.
Presidents get credit for a strong economy in good times and blame for a struggling economy in bad times, as Biden is now experiencing. With inflation across the country, including on Main Street, Biden’s approval won’t recover unless he takes it upon himself.