Small Business Outlook: Confidence in economy drifts up

The latest MetLife & U.S. Chamber of Commerce Small Business Index shows that about half of America’s small business owners have a negative view of the economy while having a positive view of their own businesses’ health.  That negativity has lessened since last year and small business owners’ feelings about their local economy are ticking upwards as well.  Inflation still tops the list of concerns and increased labor costs are cooling Main Street employers’ expectations for hiring additional staff.

Listen: Tom Sullivan and National Federation of Independent Business (NFIB)'s Holly Wade talk about their small business forecasts on a weekly podcast. Listen here.​

Watch: Catch Tom Sullivan on ASBN (America's Small Business Network) every month providing the latest small business policy updates, news, and analysis. Watch here.

Just Released! The Q1 2024 MetLife & U.S. Chamber Small Business Index was released on April 2.

New Small Business Data

MetLife & U.S. Chamber of Commerce Small Business Index for Q1 (April 2, 2024)

Summary: Negative feelings on the economy lessen for Main Street and inflation remains front and center on small business owners’ radar.

• 33% of small business owners are positive about the national economy’s overall health (increased 8 points since last quarter) and 48% are negative about the U.S. economy (5 points less negative than last quarter).
• 38% of small business owners are positive about their local economy (8 points higher since last quarter) and 30% have a negative view of their local economy (2 points less negative than last quarter).
• 52% of small business owners rank inflation at their top concern (9th consecutive quarter at top). 
• 16% of small business owners added staff in the past year (down 1 point from last quarter and down 3 points from a year ago).
• 36% of small businesses plan on increasing investment over the next 12-months (6 points lower than last quarter) and 34% of small businesses plan on adding staff (6 points lower than last quarter).
• The percentage of small businesses anticipating increased revenues remains elevated (67%) albeit 4 points lower than the last 2 quarters’ record highs.
• 65% of small businesses believe the health of their own businesses is good (1 point increase from last quarter) and 67% are comfortable with their current cash flow (no change from last quarter).
• 60% of small business owners are concerned about cyber threats and 48% have trained staff on cybersecurity safety measures.
• 62% of small business owners contribute to a “rainy-day fund” in anticipation of a crisis or threat and 61% feel comfortable about their ability to withstand a disaster. 

Gusto New Business Formation Report (April 2, 2024)

Summary: Some startup trends remain the same (funding through personal savings) and some are different (women outpaced men in 2021 and 2023).

• 49% of 2023’s startups reported they are women-owned (no change since 2020 and 20 points more than 2019).  45% of 2023’s startups reported they are owned by men.
• 70% of women CEOs cited flexibility as the top motivator for launching their business in 2023 and flexibility ranked highest for startups owned by men too (66%).
• 67% used $10,000 or less (mostly in personal savings) to start their businesses in 2023.
• 35% of 2023’s startups hired fully remote employees (13 points higher than 2022).

National Federation of Independent Business (NFIB) March Jobs Report (April 4, 2024)

Summary: Small businesses scale back hiring plans as wage inflation continues.

• 37% of small businesses reported job openings they could not fill in March (no change from February and still far above the 49-year average of 23%).
• 56% of small businesses hired or tried to hire in March (no change from February).  Of those hiring, 86% of owners reported few or no qualified job applicants (5 points lower than February).
• 11% of small business owners are planning to create new jobs in the next 3-months (down 1 point from February and lowest point since May 2020).
• 38% of businesses raised compensation in February (up 3 points since February) and 21% of small business owners plan on raising compensation in the next 3-months (up 2 points from February).
• 31% of small businesses have openings for skilled workers (down 1 point from February) and 14% have openings for unskilled labor  (up 2 points from February).

WSJ / Vistage Small Business CEO Confidence Index (March 27, 2024)

Summary: Confidence on Main Street has not changed much since February as revenues and profit expectations plateau.  Small employers have incrementally upped hiring plans since the start of the year because of steady demand.

• 27% of small business owners say the economy has improved compared to 12 months ago (down 3 points from February) and 27% say that the economy has gotten worse over the past year (1 point worse).
• 26% of small business owners believe the economy will improve in the next 12 months (up 2 points from February and up 10 points from a year ago) and 22% believe the economy will worsen (no change).
• 51% of small businesses report that consumer demand is growing and 11% report a slowdown.
• 54% of small businesses plan on increasing employees in the next 12 months (up 3 points from February). 
• 34% of small businesses expect to increase fixed investments in the next 12 months (up 2 points ).
• 62% of small businesses expect increased revenues in the next 12 months (1 point less than February). 
• 48% believe profitability will improve (down 3 points from February) and 17% of small business owners believe profitability will decrease (1 point worse than February).
• 12% have openings for unskilled labor (down 3 points from January).

Goldman Sachs 10,000 Small Business Voices Survey(March 7, 2024)

Summary: The divide between positivity in small business owners’ own operations versus their outlook on the national economy continues.

• 63% of small business owners give the federal government a “C” or below as a grade for the effectiveness of programs, services, and tax credits available for small business.
• 71% of small business owners give the federal government a “C” or below as a grade for marketing and communicating about government programs, services, and tax credits available for small business.
• 34% of small business owners believe they have a good sense of federal government offerings.
• 57% of small business owners expect to add jobs this year and 62% expect increased profits by year end.
• 75% of small business owners are optimistic about the financial health of their business through 2024 and 28% view the national economy as good or excellent.
• 91% of small business owners say they will vote in the 2024 presidential election.

CNBC | SurveyMonkey Small Business Confidence Index for Q1 (February 22, 2024)

Summary: Small business optimism holds steady in the first quarter with a boost of confidence in the Federal Reserve. 

• 38% of small business owners feel good about the health of their own business (no change from last quarter) and 17% feel bad about their own business (no change from last quarter).
• 48% of small business owners expect increased revenues in the next 12-months (up 2 points from last quarter).
• 44% of small business owners have a negative view about the state of the economy (down 2 points from last quarter) and 28% of small business owners have positive view (up 5 points from last quarter).
• 29% of small business owners believe inflation has peaked (up 1 point from last quarter) and 69% expect inflation to continue to rise (down 1 point from last quarter).
• 35% of small business owners are confident in the Federal Reserve’s ability to control inflation (up 7 points from last quarter).
• 49% of small business owners anticipate negative impact from federal regulations over the next 12-months (up 1 point from last quarter).

About the authors

Thomas M. Sullivan

Thomas M. Sullivan is vice president of small business policy at the U.S. Chamber of Commerce. Working with chambers of commerce and the U.S. Chamber’s nationwide network, Sullivan harnesses the views of small businesses and translates that grassroots power into federal policies that bolster free enterprise and reward entrepreneurship. He runs the U.S.

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