Wall Street Journal/Vistage Small Business CEO Survey: Economic confidence eroding
Economic confidence among small business firms is gradually eroding, according to results from the July 2017 Wall Street Journal/Vistage Small Business CEO Survey. The survey, which had 740 respondents, reported that the Small Business Confidence Index measured 110.0 in July, compared to 110.4 in June and 113.5 in January.
In his analysis of the survey, Dr. Richard Curtin of the University of Michigan surmised that “the falloff in the overall confidence index was mainly due to downward revision in the anticipated pace of economic growth.”
Other key findings from the survey include the following.
CEOs express less confidence in Trump administration
Only about one-third of small business CEOs (34 percent) said that the Trump administration had improved their business outlook, compared to about half of leaders (48 percent) in January.
“The data suggest that the overall declines in confidence have been due to disappointment in the Trump administration,” said Curtin. “These declines, however, have been largely offset by the expectation of continued growth in their firms’ revenues and profits.”
Optimism about economic growth is decreasing
The majority of CEOs (53 percent) said that they believed the U.S. economy has improved this year, compared to 57 percent last month. However, leaders were much less optimistic when asked about prospects for the future. Only 36 percent said that they expected growth to increase in the year ahead, a sharp decline from the 60 percent reported in January. Nearly half (49 percent) of CEOs said that they expected economic conditions to stay about the same for the remainder of 2017.
Investment plans and hiring plans remain strong
Consistent with the past seven months, about half of small firms reported that they plan to increase investment expenditures during the year ahead. Similarly, 59 percent of firms said they intend to continue to increase their employee counts — a figure lower than last month (61 percent) but higher than one year ago (53 percent). In addition, nearly half of firms (49 percent) said that they have increased the pay of employees in the last several years. Their reasons included talent retention (35 percent), business growth that allowed for pay increases (20 percent), and increased overtime and commissions (6 percent).
Positive outlook for revenue and profits
Three-quarters of small firms (75 percent) said that they expected gains in sales revenues in the year ahead. This is consistent with the 73-77 percent range reported since December 2016. In addition, more than half of firms (59 percent) said that they expected higher profits in the next year. Again, this is largely consistent with figures reported in the last six months.