More than half of U.S. small business owners who responded to a National Federation of Independent Business (NFIB) survey in July said they believe the economy is already in a recession, but they also reported that their own businesses are financially strong.

The Nashville-based NFIB has been conducting monthly surveys since 1986 among its 325,000 members, who typically employ up to 10 people and report gross sales of about $500,000 a year.

The July survey focused mainly on small businesses’ views on the state of banking in the wake of the Silicon Valley Bank failure and their credit needs. However, survey respondents also answered questions about the economy, with 52 percent saying they believe the economy is already in a recession, down from 55 percent in April, Reuters reported.

That belief appears to run counter to signs of economic strength and growing evidence that the economy could avoid a long-anticipated recession.

Recent indicators have shown strong retail sales and increased spending on services, the top two small business industries. NFIB businesses said they see their own finances as strong and their local economies relatively healthy.

At the beginning of 2023, warnings of a looming recession were everywhere. Many experts have been surprised by the resilience of the economy.

In the first quarter of 2023, gross domestic product rose by 2 percent and the U.S. economy grew at an annual rate of 2.4 percent in Q2, exceeding Wall Street economists’ expectations. Unemployment is close to a 54-year low.

Twenty-one percent of small business owners responding to the survey reported that inflation was their single most important problem in operating their business. 

A historically high 42 percent of respondents reported that job openings were hard to fill. Sixty-one percent reported hiring or trying to hire in July, up two points from June. Of those hiring or trying to hire, 92 percent of respondents reported few or no qualified applicants for the positions they were trying to fill.

The Federal Reserve has raised benchmark interest rates 11 times since March 2022,

“With small business owners’ views about future sales growth and business conditions dismal, owners want to hire and make money now from solid consumer spending,” said NFIB Chief Economist Bill Dunkelberg. “Inflation has eased slightly on Main Street, but difficulty hiring remains a top business concern.”

While some investors say that the U.S. economy could tip into a recession later this year, more economists are beginning to expect the U.S. can avoid a recession despite the aggressive Federal Reserve rate hikes. Goldman Sachs, JPMorgan Chase and Bank of America all recently forecast that a contraction seems less likely.

Payroll gains have been slowing and Americans are relying on credit cards and savings at record rates. Total credit card debt bypassed $1 trillion for the first time in 2023, the New York Fed reported.