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Pennsylvania Business Owners Struggle with Inflation and Uncertainty

Overall view of businesses in Pennsylvania affected by inflation.

News Summary

The Spring 2025 Keystone Business Climate Survey reveals that inflation remains the top concern for Pennsylvania business owners, affecting operations and growth plans. With over 40% of businesses experiencing price increases and employee retention challenges on the rise, there is a cautious outlook for the economy. Additionally, opinions on the state budget and energy policies are divided, reflecting the ongoing uncertainties in the business landscape across the state.

Pennsylvania business owners are facing significant challenges as inflation remains the primary concern for nearly 20% of respondents in the Spring 2025 Keystone Business Climate Survey. Current economic conditions rank as the second-largest concern for 14% of business owners, reflecting a climate of uncertainty in the state’s economy.

Approximately 40% of businesses reported that inflation significantly impacts their operations, while an additional 43% indicated it has a moderate effect. The continuing rise in prices has led to over 40% of businesses increasing their prices, with 16% delaying or canceling expansion plans due to financial pressures. This underscores the substantial effect of inflation on planning and growth expectations within the business community.

Besides inflation, challenges associated with employee retention and qualification have arisen, with just under 14% of respondents highlighting the availability of skilled workers as a major concern, and 10% citing difficulties in retaining those employees. In comparison, concerns surrounding state taxes on business income and government regulation are mentioned by 5% of businesses, while federal tax worries are noted by only 3%.

Interestingly, issues related to supply chain disruptions, which were a dominant concern during the COVID-19 pandemic, are now reported by just 1% of businesses, signaling a possible stabilization in that particular area.

Economic Outlook and Business Sentiment

The survey indicates a cautious outlook among Pennsylvania business owners, with 40% expecting business conditions to decline within the next six months. Only 29% anticipate improvement. Employment levels have seen a mixed response, with 31% of businesses reporting lower staffing than six months ago, while 15% have increased their workforce, and 48% say their employment levels have remained stable during this period.

Sales trends exhibit similar dichotomy, with 29% of businesses reporting a decrease in sales over the last six months, while 19% noted an increase. Looking forward, 36% of respondents are optimistic about rising sales, but 26% foresee a decline.

State Budget and Energy Policy

Opinions on the state budget reflect division among business owners, with 48% supporting Governor Shapiro’s proposed 9% spending increase, while 40% oppose it. On energy policy, preferences vary, with 34% favoring the development of renewable resources, 23% supporting natural gas production, and only 9% advocating for nuclear energy investments. There is an ongoing debate regarding whether government mandates on renewable energy will assure reliable electricity supply, demonstrating a significant split in opinions across the sector.

Additional Concerns and Perspectives

Transportation services, particularly SEPTA and PRT, are struggling with substantial operating deficits, prompting discussions among business owners, with 25% suggesting the state should increase funding for these transit services. Furthermore, there is a general consensus (57%) that skill video games should be regulated and taxed, reflecting a strong stance on emerging economic issues.

Political sentiment also factors into the survey, where initial ratings for President Trump during his second term show a 49% approval, while Vice President J.D. Vance garners a 43% positive rating. Senators David McCormick and John Fetterman also maintain ratings at 44% and 41%, respectively. Governor Shapiro’s job approval stands at 50%, with 29% expressing negative feelings towards his performance.

Survey Details

The Keystone Business Climate Survey was conducted from April 29, 2025, to May 15, 2025, with responses from 211 business owners and managers across Pennsylvania. The results from this spring show little change compared to the Fall 2024 survey results, emphasizing ongoing challenges faced by businesses in the state.