Small Business Outlook: Latest Data Shows Nervousness Around Growth

Every week, the U.S. Chamber's Vice President of Small Business Policy, Tom Sullivan, summarizes the latest data on small businesses from leading organizations, including CNBC, The Wall Street Journal, Intuit, and more, and explains what it all means for the health of America's small businesses and the national economy.

The latest: Consumers are starting to hold back. Will that mean small business owners can relax their hiring plans?  Post-election sales expectations continue to be high, but Main Street businesses are nervous about growth.

New Small Business Data

Fiserv Small Business Index (July 16, 2024)

Summary: Monthly benchmark based on consumer spending using payment processing data. Consumers are pulling back, and sales are still up compared to a year ago.

• Month-over-month sales at small businesses in June dropped -2.9%, and transactions dropped -1.5%.
• Year-over-year sales at small businesses rose 1.6% compared to June 2023, and transactions rose by 4.4% compared to last year.
• Spending increases in June came from insurance (rising premiums), amusement (summer foot traffic), and web-based content hosting (subscriptions).
• Spending decreases in June came from retail, accommodations, restaurants, ambulatory health care, and professional services.

National Federation of Independent Business (NFIB) Small Business Optimism Index (July 9, 2024)

Summary: Inflation persists, and small businesses are raising prices to stay afloat.

• 12% of small business owners reported higher sales in the past three months (2 points better than in May), and the percentage expecting higher sales stayed the same at 13%.
• 21% of small business owners ranked inflation as their top concern (1 point lower than May and still the top cited problem), and 19% of small business owners ranked labor quality as their top problem.
• 27% of small businesses raised their prices in May (2 points higher than May), and 26% are planning on raising prices in the next 3 months (2 points lower than May).
• 52% of small business owners reported capital outlays in the last six months (down 6 points from May and the lowest reading since August 2022), and 23% are planning capital purchases in the next three months (no change from May).
• 7% of small business owners expect better credit conditions in the next 3 months (no change from May).
• 61% of small business owners are not interested in a loan (3 points higher than in May), and 28% report borrowing on a regular basis (3 points lower than in May).
• 4% of small business owners reported that financing was their top problem in May (down 2 points from May’s record percentage).
• 4% of small business owners believe the next three months are a good time to expand (unchanged from April and May and down four points from January).

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

Summary: Small businesses began the summer with an uptick in post-election confidence.

• 19% of small business owners say the economy has improved compared to 12 months ago (no change from May), and 34% say that the economy has gotten worse (no change from May).
• 24% of small business owners believe the economy will improve in the next 12 months (up 3 points from May), and 24% believe the economy will worsen (3 points better than May).
• 52% of small businesses plan on increasing employees in the next 12 months (up 4 points from May).
• 36% of small businesses expect to increase fixed investments in the next year (up 4 points from May).
• 62% of small businesses expect increased revenues in the next 12 months (up 4 points).
• 49% believe profitability will improve (up 4 points from May), and 16% of small business owners believe profitability will decrease (4 points better than in May).
• 51% of small business owners believe inflation will rise at a slower rate over the next 12 months (up 2 points from May), and 7% believe inflation will rise at a greater rate than this past year (1 point lower than May).
• 59% of small business owners report that labor costs are the top source of inflation in their businesses.
• 13% of small business owners believe the latest tariffs on Chinese goods will negatively impact their businesses. 3% of small business owners believe the tariffs will be beneficial.

MetLife & U.S. Chamber of Commerce Small Business Index for Q2 (June 26, 2024)

Summary: Small business owners continue to feel good about their own operations and about their local economy. The opposite is true with regard to their feelings about the national economy.

• 36% of small business owners are positive about the nation’s economic health (increased 3 points since last quarter) and 47% are negative about the U.S. economy (1 point less negative).
• 43% of small business owners are positive about the health of their local economy (an increase of 5 points since last quarter), and 27% are negative about their local economy (3 points less negative than last quarter).
• 55% of small business owners rank inflation as their top concern (3 points higher than last quarter and the 10th consecutive quarter where inflation tops the list of concerns).
• 46% of small businesses plan on increasing investment over the next 12 months (10 points higher than last quarter), and 41% of small businesses plan on adding staff (7 points higher than last quarter).
• The percentage of small business owners expecting increased revenues reached a record-high 73% (an increase of 6 points since last quarter).
• 66% of small businesses are confident in the health of their own business (1 point increase from last quarter), and 73% are comfortable with their current cash flow (6-point increase from last quarter).
• 22% of small businesses increased staff over the past year (6 points higher than last quarter and tied with the highest level reached 2 years ago).

Goldman Sachs 10,000 Small Business Voices Survey on Child Care Challenges (June 20, 2024)

Summary: Many small business owners believe that solutions to child care will help solve the worker shortage crisis.

• A majority of small business owners believe that providing solutions for access to child care will help alleviate worker shortages that have stifled small business growth for several years.
• 35% of small business owners report their employees have cut work hours or dropped out of the workforce due to lack of affordable access to child care.
• 38% of small business owners report that lack of affordable child care choices has had a negative impact on operating or growing their business.
• 62% of small business owners believe that being able to offer a child care benefit would positively impact recruitment and retention of employees.

Small Business Cash Flow Trend Report for Q1 2024 from OnDeck and Ocrolus (May 23, 2024)

Summary: Small business owners remain confident in their cash flow and expectations despite continued headwinds of inflation. 

• The top reason why entrepreneurs start their own business is to be their own boss (37.7%), followed by the potential for greater income (25.8%).
• 93% of small business owners are expecting moderate or significant growth over the next 12-months (up 1 point from last quarter).  Immigrant-owned businesses have the greatest optimism, with 41% expecting significant growth over the next 12-months.
• 72% of small businesses have more than a 30-day cash buffer.  41% keep a minimum balance of one month’s revenue in a checking account and 56.2% have a business line of credit.
• Payroll as a percentage of revenue rose 1 point from a year ago to 19.5%.
• 92% of family-run businesses are run by first-generation business owners and 58% of those businesses plan on passing the business on to a family member in the future. 

American Express Amex Trendex: Small Business Edition (May 8, 2024)

Summary: Entrepreneurs love being small business owners, even with strong headwinds.

• 95% of small business owners are happy with their decision to start their company.
• 84% of owners started their small business because of personal passion. 65% started their business because of a need in their community.  59% started their business to support their family and future generations, and 44% started their business because they needed more flexibility.
• 60% of small business owners expect to run their business for more than 5 years.
• Rising prices are the top concern of small business owners and those inflationary pressures are greatest in labor costs (81%) followed by commercial insurance (68%), goods & inputs (67%), employee benefits (including health insurance) (63%), and access to capital (57%).

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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