PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

Gallup’s Small Business Optimism Index: A Tale of Mixed Stories

By at 16 September, 2020, 11:05 am

by Raymond J. Keating-

The latest Wells Fargo/Gallup Small Business Index survey shows small businesses reclaiming some optimism since April, though with continued deterioration in an important look at how things are going now and still a long way to go overall compared to before the pandemic hit.

Specifically, the latest take on this Small Business Index, released on September 9, registered a score of 60 for the third quarter of this year. That was up from April’s 48 for the second quarter, but strikingly short of the pre-pandemic level of 142 in the fourth quarter of 2019. The first quarter 2020 score was 132.

This Index is made up of two sub-measures – the present situation and future expectations.

The Present Situation

Unfortunately, the present situation measure has continued to deteriorate – from a measure of 67 in the fourth quarter 2019 to 63 in the first quarter 2020, 39 in the second quarter and 19 in the third quarter 2020. That’s deeply troubling, and likely reflects the dire situation for so many small businesses across the economy.

Future Expectations

At the same time, small business owners remain an optimistic bunch, and the future expectations measure regained some ground in the third quarter. It came in at 75 in the fourth quarter 2019, 69 in the first quarter 2020, a mere 9 in the second quarter, and then rebounding to 41 in the third quarter.

It seems that small business owners are saying that if they can survive this current mess, then they’re a bit more optimistic about what lies ahead.

How They are Operating

On some specifics, as for how COVID-19 has affected small businesses, 38 percent of small business owners said that their business was operating normally, 30 percent said they were operating with reduced hours and staff, 23 percent were operating with services affected, and 8 percent were closed temporarily due to restrictions.

Outlook on Recovery

Regarding the economic recovery, “Relatively few small-business owners believe the U.S. economy will rebound this year as a result of the pandemic. About half (48%) predict the economy will recover in the second half of next year or later.”

As for the time it will take for their own businesses to recover, 32 percent said more than a year, 26 percent up to a year, 17 percent a few months, 9 percent within weeks, and 1 percent never.

The 2020 Elections

Finally, also regarding what might lie ahead, the Gallup survey asked small business owners about the November election. It was reported:

“The majority of small-business owners are engaged in the upcoming presidential election with 59% saying that the candidate who wins in November will have a significant impact on their business. Another 24% say the outcome will have a minor impact. At the same time, just about half of small-business owners (48%) report that the candidates are discussing issues most important to them as owners.”

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

 

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