Small business owner confidence improved this quarter, according to new data from Wells Fargo and Gallup. Specifically, the duo’s headline optimism gauge jumped to 142 during the final three months of 2019, a new all-time high that suggests most owners continue to not be unnerved by the ongoing trade dispute between the U.S. and China. This makes sense since the majority of small businesses in America derive the bulk of their revenue domestically and are therefore less sensitive to tariffs and foreign demand. Additional evidence of this can be found in the recent ADP data signaling a stark hiring contrast going on this year between small businesses in the manufacturing and service sectors.
A prolonged trade war could eventually spill over into the rest of the economy but for now other concerns appear more prevalent in owners’ minds. For example, “hiring and retaining quality staff” was once again one of the most frequently cited challenges for small businesses, albeit much less so than in previous quarters. This is perhaps a welcome side effect of the recent improvements in worker compensation (wages and benefits) that help companies attract talent. Looking ahead, surveyed owners’ optimism about the future climbed to a record high in Q4, as did the net percentage of respondents who reported plans to increase their capital outlays (investment in the company). The upcoming presidential election, though, was cited as a major source of uncertainty in the year ahead for many small business owners, likely do to the outcome’s potential impact on their future tax rate and regulatory burden.
Sources: Wells Fargo, ADP