RALEIGH – Small business owners are feeling more optimistic than at any point in the prior 19 years, a new survey from PNC found. But consumers aren’t nearly as excited about the future.

Owners with a higher share of employees reporting they’ve been fully vaccinated against COVID-19 are even more optimistic.

The survey, which was conducted throughout the month of August 2021, asked small business owners about the actions taken to encourage or require employee vaccination against COVID-19.

Eight in 10 business owners reported that they’d taken at least one step to encourage–or require–their employees to become fully vaccinated against COVID-19, according to the study, and 48% reported they’ve required vaccinations against COVID-19.

The survey results indicated 53% of business leaders with fewer than 100 full-time employees have required their employees to receive the vaccine.  But for those businesses with 100 or more full-time employees, only 26% had required vaccination against COVID-19.

“And this was before the Biden Administration mandate,” said Gus Faucher, chief economist for PNC Bank, which commissioned the study.  “So that number may increase.”

Consumer contrast

The positive news contrasts with that of consumers. U.S. consumer confidence declined for the third straight month in September, according to The Associated Press.

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The Conference Board said Tuesday consumer confidence index fell to a reading of 109.3 in September, down from 115.2 in August. September’s reading is lowest level for the index since it sank to 95.2 in February.

Lynn Franco, senior director of economic indicators for the Conference Board, said that consumer confidence is still high by historical standards but noted that the index has fallen by nearly 20 months since reaching 128.9 in June. “These back-to-back declines suggest consumers have grown more cautious and are likely to curtail spending going forward,” Franco said, according to The AP.

The view of consumers on both the present situation and future expectations continued to degrade as intentions for spending on big items likes homes, autos and major appliances all retreated again, the board said.

Concerns about inflation are also dampening consumer sentiment.

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Business owners optimistic, despite concerns

Despite increasing concerns about the Delta variant, labor shortages, and inflation, small business owners are optimistic about the future of their business and about the future of the economy, the study found.

And small business owners who reported higher vaccination rates among their employees were more optimistic than their peers, Faucher noted.

“Those businesses that have the highest number of share of employees vaccinated feel more optimistic about their prospects,” said Faucher.

“There are different reasons,” Faucher noted.  “Presumably, areas with higher rates among employees will also have higher vaccination rates among customers.”

Businesses may also believe there will be fewer disruptions to their business with a higher share of their employees vaccinated, said Faucher, and may also feel more optimistic, generally.

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“Businesses have a better sense of how to respond now, they’ve been going through this for more than a year,” said Faucher.  “They know what they can do to keep their businesses open, they know what they can do to have employees work remotely, they have procedures in place.”

“They believe that as long as things don’t get worse, they can handle the Delta variant,” said Faucher.

And that’s leading businesses to be optimistic, Faucher noted the survey results indicate.  In fact, according to the study, business owners profit expectations doubled in this survey compared to the prior PNC survey that was conducted in the spring, and sales and demand have reached the highest levels in the survey’s 19-year history, PNC said in a statement.

“I think the key thing is that businesses generally are feeling optimistic,” said Faucher.  “They view vaccinations as key to the economy over the next couple of years.”

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The economic outlook, from the perspective of SMBs

“The North Carolina economy is recovering a little faster than what we’re seeing in the rest of the United States,” said Faucher. “Part of it, that some of the restrictions that we’ve seen in other parts of the country haven’t been as intense as in North Carolina,”

“The initial contraction was not as severe,” noted Faucher.

“As of August, the unemployment rate in NC was at 4.3% whereas nationally was 5.2%,” said Faucher.  “I think it’s fair to say that conditions are improving, and they’re improving in North Carolina greater than compare to the rest of the country.”

Yet the labor market remains tight, and small businesses are reporting concerns about a labor shortage, said Faucher.  “In labor shortages, which are a problem nationally, given the lower unemployment rate in North Carolina, it’s probably also a factor,” he said.

Nationally, according to the survey results, about a third of small businesses reported having difficulty finding workers, said Faucher.  That’s a result of different factors, noted Faucher.

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While 58% of employers cited a belief that enhanced unemployment compensation benefits were a root cause, Faucher said that is more likely a secondary factor, as in North Carolina, there was actually a decline in employment after the expanded unemployment benefits ended.

Furthermore, added Faucher, “the data that I’ve seen that indicated that states that ended those benefits earlier have not enjoyed any benefits over any other states.”

What could be a primary factor in the labor market, said Faucher, are worker concerns about COVID-19 and the Delta variant.

But other factors might play a role as well, he noted, including access to childcare, and the decision from some workers to retire early.

Labor shortages are just one challenge that business owners report they’re facing.

Another challenge?


As inflation soars, should price and wage controls be brought back?

More than half of those surveyed, or 54%, expect to raise prices they’ll charge consumers during the next six months, the survey found.  One in three businesses cite higher non-labor costs as a reason to expect a price increase, and one in four cite higher labor costs.

Businesses are also expecting their suppliers to increase prices during the next six months, with 46% reporting this forecast.  80% of survey respondents expect consumer prices to increase this year, with 62% expecting an increase of 3% or greater, the survey found.

“SMBs think that the prices they charge are going to be higher, and that the prices they’ll pay are going to be higher,” said Faucher. “Certainly suggests that inflation is on their minds,” he added.

“But I would also suggest, given the optimism we observed in the survey,” said Faucher.  “That they don’t view stronger inflation as a threat to the recovery.”

From the perspective of a small business owner, based on the survey results, said Faucher, the biggest risk to economic recovery and a large factor informing economic outlook is that either the Delta variant spreads further or a new variant emerges for which vaccination is less effective.

“Those risks are out there,” said Faucher.  “Until we really get the pandemic under control, and it feels more like the seasonal flu that we get every year, the recovery is not going to be complete.”

(The Associated Press contributed to this report.)

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