Inflation Is Small Business Owners’ Top Concern, But Some Say Reshoring Could Help

The National Federation of Independent Business’ Small Business Optimism Index rose 0.4 points in July to 89.9, but was still well below its historical average of 98. Nearly half of owners, 49 percent, reported that there were job openings last month that they could not fill. That number was down one point from June, but still historically very high. The survey’s uncertainty index also increased 12 points from last month to 67.

The issue weighing most on the minds of small business owners, however, was inflation. Thirty-seven percent of small business owners reported rising prices were the single most important problem in operating their businesses, an increase of three points from June and the highest reading since the fourth quarter of 1979.

In a new article, Harry Moser of the Reshoring Initiative argues inflation could be eased by bringing production back to North America. Moser writes, “There are key advantages to moving production to the U.S. Manufacturers would benefit from a local, just-in-time production model where goods are made as orders are received and can be delivered to consumers more rapidly. That helps drive down the costs of holding and storing unsold inventory. Producers also would avoid hefty shipping fees and tariffs on imports.”

Moser also notes companies with local supply chains fared better during the COVID-19 pandemic. Toolmaker Stanley Black & Decker, for example, shifted production of its Craftsman tools from China to Texas. It reported no increase in costs and “much less impact from the coronavirus than would have been the case if it had remained in China.”