Chart of the Week: Business Headwind Expectations

Chart 5 22 18
As part of the monthly NFIB Small Businesses Survey, thousands of small business across the U.S. must identify the largest problem that their business is currently facing. The answer to this question helps to shed light on the challenges constraining the U.S. economy. The chart above shows how the answer to this question has changed dramatically over the last ten years.

Coming out of the Great Recession, by far the most common answer to this question was poor sales data for businesses (blue line) – which makes sense given how weak the U.S. economy was at that time. As the economy has recovered over the last ten years, the primary problem faced by businesses has shifted from poor sales to the cost and quality of labor (green line). Given that the U.S. is near record low unemployment, there are simply not many qualified workers available to fill job openings, this has begun to drive labor costs higher, as employers are willing to pay up for qualified workers. This labor constraint may become more of a headwind to growth moving forward, as rising labor costs may crimp corporate profit margins.