Two Small Business Optimism Surveys Show Diverging Trends
Small business optimism is on the rise once again — or is it? As it turns out it depends on who you ask. Recently two reports that look to quantify businesses sentiment have come to diverging conclusions.
First up, Vistage‘s Q2 2019 CEO Confidence Index of small and mid-sized business CEOs found optimism falling to a near 10-year low. The index came in at 88.4 — down from 91.6 in the first quarter of the year — putting it just above the record-low 87.9 that was recorded in late 2009. Moreover only 13% of respondents expected the economy to improve in the year ahead. Meanwhile the number of small business CEOs anticipating increased profits and revenues in the next year also fell, reaching 54% and 64% respectively, down from 62% and 78% a year ago.
Commenting on Vistage’s latest report, University of Michigan research associate professor Dr. Richard Curtin said, “Damage done to the economy from the tariffs, the slowdown in job growth as well as heightened economic uncertainty has been substantial.” However Curtin went on to note, “Despite these concerns, firms still held net favorable views that the Trump administration has helped their business [42% versus 26%].”
Interestingly, while Vistage’s index reached historic lows, the National Federation of Independent Business‘s (NFIB) index actually rebounded to a multi-month high. Optimism levels increase by 1.5 points in May to reach 105 — the index’s highest level since the federal government shutdown earlier this year. In a statement, NFIB president and CEO Juanita D. Duggan said of the results, “Optimism among small business owners has surged back to historically high levels, thanks to strong hiring, investment, and sales. The small business half of the economy is leading the way, taking advantage of lower taxes and fewer regulations, and reinvesting in their businesses, their employees, and the economy as a whole.” Similarly the group’s chief economist William Dunkelberg stated, “Small business owners are demonstrating a continued confidence in the strength of the economy and are betting capital spending dollars on it. This solid investment performance is supporting ongoing improvements in productivity and real wages.”
The dichotomy found in these two surveys is reminiscent of a recent Bankrate poll that found experts and everyday Americans at odds over the current economic conditions. That said the divergence here could be due to multiple factors, including methodology and the fact that Vistage’s index spoke to small and midsized business CEOs while the NFIB polls small business owners. Regardless, in both cases, a majority of respondents still expected good times ahead — hopefully that remains the case for many months more.
Also published on Medium.