Tide Turning on Small Business Optimism?

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Tide Turning on Small Business Optimism?

Throughout 2018 optimism among small businesses was at an all-time high. Month after month, the National Federation of Independent Business’ Small Business Optimism Index showed entrepreneurs were enthusiastic about their future prospects and the economy at large. Moreover, in November, the index celebrated two years of record optimism. Now a new survey from The Wall Street Journal and Vistage Worldwide Inc. suggests some of that positivity may be fading, potentially signaling a turnaround.

According the latest survey, only 14% of business owners polled say that they anticipate the U.S. economy to improve this year. On the contrary, 36% expect it to decline. Similarly University of Michigan economist Richard Curtin told the Journal, “We could be at a turning point. Recessions are not made of one firm collapsing, but of many firms cutting back in marginal ways.”

In terms of what entrepreneurs expect for their own businesses, WSJ found that pessimism increased from January 2018. They also note that this is the first time that’s happened since President Trump took office. Speaking of Trump, the latest survey found that 42% of respondents thought that the current administration’s policies helped their businesses. That’s down from 52% that said the same one year ago. Meanwhile one-quarter of owners said the administration was bad for their business with another 34% noting no impact.

Of course it’s not all bad news. Although the percentage of businesses that anticipate revenue growth in fiscal 2019 was down from last year’s 83% figure, a solid two-thirds of those surveyed still expect gains. The Journal also shared anecdotes from business owners who are still optimistic for the year ahead. For example Southwest Geotechnical LLC owner Justin Stratton told WSJ, “Business is rocking. I am being told by developers that they are looking for a banner year.”

Other business owners interviewed suggested they have more mixed feelings than anything. After sharing that he lowered his business’s fall 2019 order by 25%, Kenny Rubenstein explained, “I’d rather play it safe at this point.” He went on to say, “I’m divided right down the middle. Half of me is very positive. Half of me is very nervous.”

Ultimately it seems as though, more than any other single factor, its uncertainty that driving small business optimism lower. To that point, this particular survey was conducted during the partial government shutdown, which caused issues for owners seeking SBA loans and also impacted many small businesses in the District of Columbia and elsewhere. Given those circumstances, it may be too early to declare that the tide is officially turning but it would likely behoove entrepreneurs to use caution when navigating this year’s waters.

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Author

Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded DyerNews.com in 2015 to focus on personal finance and the emerging FinTech markets.

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