main street and wall street are often at a distance when it comes to the state of the economy the likelihood of a recession hitting in 2022 is the latest example both camps are bearish but small business owners are leading the way in negative sentiment by a notable margin wall street has been consumed with the federal reserves efforts to combat the inflation it pegged wrong for too long and the risk that interest rate hikes will lead to a recession a survey earlier this week from cnbc found that more than half of economists and investment professionals expect the fed to fail in its mission to engineer a soft landing for the economy but the stock market breathed a sigh of relief on wednesday anyway with stocks surging after fed chair jerome powell said that a more aggressive rate hike of 75 basis points as not being considered and that the central bank remains convinced it can bring inflation down without crashing the economy on main street the central bank messaging isnt likely to cause as much relief eight in ten small business owners expect a recession to occur this year according to the latest cnbcsurveymonkey small business survey for q2 2022 inflation remains the top concern for small business owners polled by cnbc and their business outlook is negative the survey finds few small business owners seeing any bright spots in the current economy just 6 rate the current state as excellent and 18 as good while 31 rate it as fair and 44 rate it as poor while the surveys small business confidence index ticked up for the first time in the biden administration due to responses on core index questions related to immigration policy and a 3 percentage point increase to 36 among small business owners who described their current business conditions it remains near its alltime lows confidence among small business owners is still well below its prepandemic baseline there just isnt a lot of optimism on main street these days said laura wronski senior manager of research science at momentive which conducts the survey for cnbc small business survey results can be influenced by politics with the community skewing conservative but economic worries are high among all small business owners those who identify as republicans or lean to the gop are leading the bearish outlook with 91 expecting a recession but among those who are democrats or lean to the democratic party it is still 66 that expect a recession the survey was conducted by momentive between april 1825 among a national sample of 2027 selfidentified small business owners in a parallel survey of the general public conducted for cnbc a nearlyidentical 77 expect a recession to occur this year again with republicans more apt than democrats to forecast trouble ahead 87 vs 71 thirtyeight percent of small business owners say inflation is their biggest concern twice as many as the second place supply chain disruptions 19 and well above covid19 13 and labor shortages 13 a majority of small business owners 75 surveyed say theyre currently experiencing a rise in the cost of their supplies but as much as they need to offset those rising costs by raising prices of their own the cnbc survey finds more are hesitant to pass on price hikes to consumers who are already hardhit by inflation the percentage of those raising prices is down from 47 to 40 quarter over quarter just 17 say now is a good time for businesses to raise prices in general about half the number 35 who say now is a bad time to raise prices almost half 47 have mixed opinions on whether now is a good or bad time to raise prices while this finding contrasts with other recent small business surveys showing that price increases are still the norm given the input costs rising the cnbc data matches a bleaker outlook found in other recent main street data the national federal of independent business monthly surveying shows the outlook for business conditions at the lowest level in its history and that bearish view has increased sharply the percentage of small business owners who expect conditions to be worse in the next six months hit a net negative 49 in march the most recent month for which data is available increasing from a net negative of 35 in the previous month in august that reading was at a net negative 28 the inflation pressures have continued and now seem more builtin and foundational said holly wade director of the nfib research center it really is a concerns about the ability to operate a business going forward and it is incredibly stressful to find ways to balance absorbing the price increases from inputs and the level to which have those price increases are passed along  something has to break and it will likely be a recession she said they can only do so much said eric groves cofounder and ceo at online small business platform alignable they are already inhibited from getting all the inventory they want and they only way they get out of this is to bring customers back and drive more revenue and they are struggling to figure it out his firms research on small business anticipation of full sales recovery to prepandemic levels continues to shift out farther in time since the end of 2021 every month of its data has shown a shift in outlook in when main street expects to be back to full recovery at the beginning of this year the expectation was q1 2023 and now it is q4 2023 the customers are not coming back as fast as they thought and inflation is squeezing margins and with all of that going on it is not surprising the sentiment is that a recession is coming groves said the ability to shift pricing to customers is not as strong as it is for a big box business the challenge for many of these businesses has been the ability to access inventory they need to sell at a competitive rate which remains much lower than for a big retailer they are not getting their fair share of the widget he said the percentage of small businesses indicating they are back to at least 90 of prepandemic revenue which had been a sign of health is dropping again according to alignable from 40 to 27 in its most recent data as they attempt to compete against much better economics of scale even the best market pundits have a weak track record at calling a recession at least the exact timing and there is no reason to expect that small business owners are any better at pinpointing this economic turning point but such a negative view on the economy coming from a large component of it is significant this hasnt shown up in the q1 business investment figures which were solid but a recent slowing in core durable goods shipments in the past two months suggests a slowing in the pace of business investment in q2 according to kathy bostjancic chief us economist at oxford economics however it is too early to say we are seeing a turning point and long lasting slowing in capex she said consumer sentiment is down sharply according to the university of michigan but consumers continue to spend at a healthy clip and the conference board measure is higher reflecting its survey focus on the labor market which remains hot right now with inventory levels so low in large part due to the supply chain disruptions companies need to continue to invest to rebuild inventory levels as well as invest in technology for productivity gains especially with the cost of labor so high business owners may be hiring less and doing more work themselves but to recruit and retain any staff right now is likely critical to increasing sales these requirements in the supply chain and labor market are adding to the stress level on main street and ultimately it can exert a real economic impact bostjancic said business owners confidence levels can directly impact their investment decisions and hiring as well they are not seeing how the current environment is sustainable wade said consumer spending is strong and gdp is strong but the stress they are feeling in trying to absorb these costs and fill positions and continue to increase compensation for retention and recruitment is all incredibly stressful she said robert fry an economist who is among the respondents to cnbcs fed survey remains of the view that a recession does not hit until late 2023 and he cited the words of rudi dornbusch a famous mit economics professor who taught central bankers a crisis takes much a longer time coming than you think and then happens much faster than you thought he views the current environment as still more rooted in negative sentiment than actual negative data three variables drive sentiment unemployment the stock market and the price of gasoline and its not a weighted average people just grab one at a time and right now its gasoline prices ultimately i think small businesses will be right theyre just early fry said they dont appreciate the lags of monetary policy  people cry wolf for a long time but the wolf eventually comes groves said how small business owners define recession may be less academic and more a reflection of just how tough their current operating conditions are and what it will take to recover to prepandemic levels and their ability to sustain the business through the next few years inflation putting pressure on margins pushing back revenue goals and shifting out the timeline to full recovery puts everything at risk for small business owners its going to be more of a slog groves said and to a business owner that may feel like recession regardless of the formal economic research i dont know what going into recession means versus the operating margins of my business being challenged and how much i have to spend on things  and i have an econ degree he said you put your head down and do whatever you need to do to survive and you do more with less and you see them working more hours owners have to figure out a way through it join us today for cnbcs small business playbook virtual event where business leaders and experts will weigh in on a variety topics affecting main street – 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