PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Small Business Optimism Remains Strong in Second Quarter

By at 17 May, 2017, 9:42 pm

 

by Raymond J. Keating-

Small business optimism remained strong heading into the second quarter of 2017, according to the latest Gallup/Wells Fargo Small Business Index. While down slightly from a measure of 100 in the first quarter, the second quarter came in at a solid 95.

Those are by far the strongest levels since the Great Recession, and are up compared to 64 a year ago. Looking back further, from the start of the recession into early 2014, the index remained below a measure of 50. Over the four years prior to recession, the index ran above 100.

More Positive in the Future

As noted in the Gallup write up: “Owners remain more positive about the future than about their current circumstances, a sentiment which has generally prevailed historically. Specifically, the future expectations score this quarter is +59, essentially unchanged from +60 in February, while the present situation score slipped by four points, from +40 to +36.”

Positive Take on Access to Credit

It also was interesting to see that small business owners were positive on the credit market, “with only 19% saying that credit was ‘somewhat difficult’ or ‘very difficult’ to obtain over the past 12 months,” which was an improvement over a year earlier.

Outlook on Hiring

On the jobs front, a few points are worth noting:

• 52% agreed that they were having “difficulty finding good people to apply for jobs at your business.”

• “Almost a third, 31%, say the number of jobs at their business will increase over the next 12 months, significantly more than the 6% who predict it will decrease. The last time owners were more likely to project shrinking rather than expanding the size of their workforce was the fourth quarter of 2012.”

These findings line up with other surveys, including, for example, the PNC Economic Outlook released on May 4. Indeed, the PNC poll of small and medium-size enterprises pointed to even greater optimism. Consider the following:

• “Optimism among business owners about the U.S. economy and the outlook for their own businesses has reached levels never-before seen in the 15-year history of the PNC Economic Outlook.”

• “Eighty-eight percent of those surveyed are optimistic about the near-term outlook on the national economy, up from 71 percent in the fall and 56 percent last spring.”

• “Eighty-nine percent are optimistic about their local economy, up from 77 percent in the fall of 2016.”

• “Ninety-four percent are optimistic about their own company’s outlook for the next six months, compared to 85 percent in the fall and last spring.”

Finally, it’s worth noting what Gallup cited as the reason for the recent jump in small business optimism:

“Small-business owners have become sharply more positive about business conditions since the 2016 presidential election, and have generally maintained that increased confidence in the latest update of the Wells Fargo/Gallup Small Business Index. Previous Small Business Index surveys have shown that owners have become more upbeat because they feel the new administration will be better for small businesses, and in particular will help in the areas of taxes, healthcare and government regulation.”

The PNC report backed up these ideas: “Overall, four in 10 (42 percent) say they expect the policies of the new administration and Congress, in general, to have a positive impact on their business this year. One-third (32 percent) say it’s too early to predict and 17 percent say it will have no impact. Only nine percent anticipate a negative effect.”

Now, we just need Congress and the White House to transform promises of broad and significant tax and regulatory relief and health care reform into reality.

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Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP: The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.

 

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