Christmas bonuses could be on the chopping block at small businesses around the U.S. this holiday season as persistent inflation may play the role of the Grinch, according to a new survey.
The November edition of the Freedom Economy Index, a joint project of PublicSquare and RedBalloon, surveyed small business owners and found that 42% of business owners who traditionally give Christmas bonuses to their employees said they can’t afford them this year.
Another 28% of business owners surveyed said they plan to provide Christmas bonuses that will be smaller than in past years. About 25% said Christmas bonuses will be about the same as past years, while roughly 5% said bonuses will be bigger this year relative to prior years.
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About 52% of retail business owners who responded to the survey said their Black Friday and Christmas sales were “much slower” than average, while about 20% each said sales were about average or slightly less than average.
Persistent inflation played a key role in the challenges facing business owners. While inflation has come down from the 40-year high of 9.1% in June 2022, it remained at 3.2% in October – well over the Federal Reserve’s 2% target – despite the Fed raising interest rates to their highest level in two decades to tamp down rising prices.
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The survey asked business owners how inflation impacts their bottom lines, with over 81% of respondents saying their suppliers’ prices have increased in the last 30 days – an increase from 76% in October.
It also found that about 91% of business owner respondents expect that “inflation will continue to be higher than normal” over the next six months – an increase from 87% in October.
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The survey also found that owners’ optimism about their businesses rose slightly in November to 31%, up from 28% in October, while pessimism decreased to 47.8% from 55.1% from the prior edition of the survey – though both shifts remained within the margin of error.
Overwhelmingly, business owners surveyed expressed concern about the economic outlook – 81% of respondents said a major recession is looming while 94% said the U.S. is on the wrong track.
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Respondents to the survey also provided explanations about how inflation is impacting their business, with several expressing concern about their ability to remain in business with rising costs and stay competitive with rivals given the need to raise prices.
The Freedom Economy Index survey also asked those surveyed about what their biggest current need is as a business. A 31% plurality said that “more economic stability” is what they’re hoping for to help their business, while another 23% said that “reduced inflation” is on their Christmas wishlist.