When it comes to the status of the economy, Main Street and Wall Street are frequently at odds. The latest example is the possibility of a recession in 2022. Both parties are pessimistic, but small company owners are far ahead of the pack in terms of unfavorable sentiment.
Wall Street predicted nine of the last five recessions, according to the late Nobel Laureate economist Paul Samuelson.
The Federal Reserve’s efforts to combat the inflation it misjudged for far too long, as well as the possibility that interest rate hikes would lead to a recession, have dominated Wall Street.
More than half of economists and investment professionals believe the Fed will fail in its objective to make a “soft landing” for the economy, according to a CNBC poll released earlier this week.
On Wednesday, the stock market exhaled a sigh of relief, with equities rising after Federal Reserve Chair Jerome Powell stated that a 75-basis-point rate hike is not being discussed and that the central bank remains confident that it can drive inflation down without destroying the economy.
On Thursday, the market was giving back those temporary gains, and the central bank messaging was never going to bring any immediate solace to Main Street. According to the latest CNBC|SurveyMonkey Small Business Survey for Q2 2022, eight out of ten small business owners foresee a recession this year.
Small company owners questioned by CNBC continue to be concerned about inflation, and their business outlook is poor. According to the survey, few small business owners perceive any bright spots in the current economy: only 6% evaluate it as great, 18% as good, 31% as fair, and 44% as terrible.
While the small business confidence index rose for the first time during the Biden admin, thanks to responses to core index questions about immigration policy and a 3 percentage point increase (to 36%) among small business owners who termed their current business conditions as good, it remains near all-time lows and below the pre-pandemic baseline.
Senior manager of research science at Momentive, which surveys CNBC, Laura Wronski said, “There just isn’t a lot of optimism on Main Street these days.”