Confidence among small-business owners in the U.S. declined in March 2022 to the lowest level in nearly two years, when the Covid-19 pandemic first hit the country, as high inflation dampened moods and became the most important problem for small firms. The NFIB’s (National Federation of Independent Business) Small Business Optimism Index decreased to 93.2 in March from 95.7 in February, registering the third decline in as many months and falling to the lowest level since April 2020. Economists polled by the Wall Street Journal expected the index to fall slightly to 95.3.

The NFIB survey is a monthly snapshot of small businesses in the U.S., which account for nearly half of private sector jobs. Economists look to the report for a read on domestic demand and to extrapolate hiring and wage trends in the broader economy.

The decline in confidence was driven by a sharp deterioration of short-term expectations, according to the NFIB. The percentage of owners expecting better business conditions over the next six months decreased by 14 points to a negative 49%, the lowest level recorded in the 48-year-old survey.

“With inflation, an ongoing staffing shortage, and supply-chain disruptions, small-business owners remain pessimistic about their future business conditions,” NFIB chief economist Bill Dunkelberg said. “Their expectations for sales growth and business conditions later this year are in the tank,” he said.