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Opinion
Jonathan Levin

Small Businesses Are Flashing a Recession Warning Signal

A Q&A with William Dunkelberg, chief economist at the National Federation of Independent Business, who is forecasting a 70% probability of a downturn in the next year.

Small businesses aren’t confident about conditions six months from now. 

Small businesses aren’t confident about conditions six months from now. 

Photographer: Daniel Acker/Bloomberg

The Federal Reserve is raising interest rates aggressively to combat the worst inflation in 40 years, and such campaigns have tended to tip the economy into recession. Yet most economists still think that the US will avoid such a fate, at least in next 12 months, with the clear exception of William Dunkelberg, chief economist at the National Federation of Independent Business, the country’s largest small-business organization. He forecasts a 70% probability of a recession in the next year, in large part based on his analysis of the NFIB’s proprietary surveys of small businesses, which he started almost five decades ago. I spoke with him about the rationale behind his outside-the-box projection. A lightly condensed and edited transcript of the conversation follows.

Jonathan Levin: Why do you believe a recession is more likely than not in the next 12 months?