Small businesses in America are experiencing a resurgence of inflation fears, while their confidence in the Federal Reserve is declining.

• Across the U.S., business owners on Main Street have a moderate outlook on the economy, but their persistent inflation worries are increasing once more.
• The stock market and the Fed have come closer to the small business view, with Fed Chair Jerome Powell stating that the fight against inflation has stalled and fewer interest rate cuts are now expected by investors.
• Entrepreneurs' inflation fears are on the rise, their faith in the Fed is declining, and high prices are the top issue they will vote on in the presidential election, according to the latest CNBC|SurveyMonkey small business quarterly data.

Small business owners were not convinced of the progress made in lowering pricing during the fight against inflation, despite the Federal Reserve and economy's efforts.

Recently, influential parties have come to the conclusion that small businesses have been correct in stating that inflation is not decreasing fast enough. On Wednesday, Federal Reserve Chair Jerome Powell admitted that despite three months of disappointing inflation data, there has been no significant progress this year. Market traders, who were previously optimistic about interest rate cuts and predicted up to six cuts by the Fed this year, are now more likely to see only one or two cuts at most.

Small business owners have long experienced disappointment over inflation, and their frustration over high prices is intensifying, according to the CNBC|SurveyMonkey Small Business Survey for Q2 2024.

A quarter of small business owners surveyed by CNBC believe inflation has peaked, down from 29% in the previous quarter and back to the same level as a year ago. Additionally, the percentage of small business owners expecting inflation to increase has also risen, from 69% in Q1 to 75% in the current quarter.

According to Lara Belonogoff, senior director of brand management and research at SurveyMonkey, small business owners are the driving force of our economy, but the Q2 survey reveals they remain pessimistic about overcoming inflation.

A national sample of 2,130 self-identified small business owners ages 18 and up participated in an online poll conducted by CNBC and SurveyMonkey from April 8 to 12, 2024.

Although the market responded positively to Fed Chair Powell's comments following the FOMC meeting on Wednesday, small business confidence in the Fed has decreased. In the previous quarter, approximately one-third (35%) of business owners expressed confidence in the Fed. This has dropped to 31%, which is the same level as in Q2 of the previous year.

"Small businesses are still worried about inflation, as stated by U.S. Small Business Administration head Isabel Casillas Guzman in an interview with CNBC's Kate Rogers at the virtual Small Business Playbook event on Thursday. She emphasized that the SBA is working to make credit more accessible to deserving borrowers, with half of businesses not receiving the funding they need entirely."

Small business owners should begin by connecting with local SBA resource partners and district offices, which can provide them with lenders on the ground, and also utilize the SBA's online Lender Match tool.

Small businesses are in agreement with the broader macro view that the economy is performing well. Over 27% of business owners describe the economy as "excellent or good," which has not decreased despite inflation fears increasing. This is a significant increase from the 21% reported in the previous quarterly survey. The economy's strong performance is reflected in the fact that nearly three times as many business owners cite inflation as the biggest risk they face (37%) compared to the second biggest threat, consumer demand, at 13%.

Despite inflation, SBA Administrator Guzman sees the 17.2 million new business applications filed during the Biden administration as a sign of economic optimism. She attributes this growth to the Biden legislation that is driving government spending on infrastructure and clean energy, which are economic growth drivers. "These are all small business trades across those opportunities," she said. "That's the economic growth the president has been focused on."

As inflation becomes more persistent, economists are increasingly linking it to fiscal policy-related spending plans and rising federal debt.

The CNBC|SurveyMonkey Small Business Confidence Index remained unchanged from the previous quarter, standing at 47 out of 100, and increased by one point from the same quarter a year ago.

The findings from the CNBC|SurveyMonkey data and Goldman Sachs' 10,000 Small Businesses Voices survey are consistent. Both surveys found that 71% of small business owners have experienced inflationary pressures on their businesses in the past three months, and 49% of them have had to raise prices. In the CNBC survey, 48% of small business owners said they are raising prices.

The presidential election will be influenced by inflation as small business owners in America make their decisions.

Small business owners' top concern is inflation, with 63% of survey respondents mentioning it, while economic growth is also a major concern with 61% of the respondents citing it.

Despite typically low confidence in President Biden's handling of the presidency among small business owners who lean conservative, a new survey shows that this confidence remains low at 31%, down two percentage points from the previous quarter. Among Republican small business owners taking the survey, only 5% approve of the job Biden is doing. On the other hand, 82% of small businesses owned by Democrats approve of Biden, though pollsters warn that approval ratings below 90% within one's own party can indicate dissatisfaction.

The Small Business Confidence Index among Biden's supporters remained unchanged quarter over quarter at 61, and increased from 55 in Q3 of 2023.

Small business owners, regardless of their political affiliation, agree that they feel overlooked by government policy in comparison to large corporations, according to a CNBC survey.

A survey by Goldman Sachs revealed that 55% of business owners feel that small business concerns receive insufficient attention from candidates. The most frequently mentioned issue was inflation, with a rate of 73%.

The SBA has doubled the number of small-dollar loans, including to startups, women, and people of color, who are starting businesses at the highest rates. Additionally, more government loan volume is going into "rural banking deserts," as Guzman stated.

The recent government scorecard shows that the total amount of government contracts going to small businesses has reached 28%, which is approximately $178 billion, said Guzman. "We want more people to do business with the largest buyer in the world," she added.