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Wells Fargo-Gallup: Small-Business Owners' Optimism Hits Record High

small business in screen of a calculator
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By    |   Tuesday, 11 December 2018 04:34 PM

U.S. small-business owners are more optimistic about business conditions now than at any point in the 15-year history of the Wells Fargo/Gallup Small Business Index.

In the latest quarterly survey, which measures small-business owners' attitudes about a wide variety of factors affecting their business, the overall index score is +129. This is up from the prior record high of +118 established last quarter.

Confidence among small-business owners has improved steadily in 2018, and now sits well above the pre-2018 high of +114 from 2006. The current survey was fielded Nov. 8-14, just after the midterm elections.

The Wells Fargo/Gallup Small Business Index, which has generally trended upward since 2013, is currently at an all-time high. The latest jump in the overall index score is based on upticks in most of the areas that compose the score.

The biggest improvements are seen in owners' assessments of their current situation:

  • Eighty percent of small-business owners rate their company's financial situation as very or somewhat good, the highest in index history.
  • A record-high 55% of business owners report increases in revenue over the past 12 months, up from 49% last quarter.
  • Seventy-four percent of owners rate their company's cash flow as very or somewhat good, up from 69% the previous quarter -- another record high.

Small-business owners were also asked about their projections for 2019, and the responses suggest a modestly optimistic outlook. Thirty-three percent of owners say they are more optimistic about their business' future going into 2019 than they were going into 2018, while 16% say they are less optimistic. The majority (51%) say their outlook is about the same going into next year.

The newly elected Congress produces mixed reactions among owners. About half say it won't affect their business either way, but slightly more believe it will have a negative rather than positive effect. Owners' overall mandate to Congress points more to the tax situation than anything else, followed by their desire that Congress focus on government regulations and deal with healthcare costs.

As has been the case in recent quarters, the prosperity being felt by these owners has its downside; owners continue to say that being able to find, hire and retain qualified employees is their biggest challenge.

The Wells Fargo/Gallup poll isn't the only recent indication of strong small-business sentiment.

Small business optimism posted a modest decline in November with a reading of 104.8, while continuing its exceptionally strong two-year trend, according to the NFIB Small Business Optimism Index.

Slightly more than half of the decline was attributable to Expected Business Conditions and Expected Real Sales. Increases in compensation tied a near 30-year high as owners seek to attract more qualified candidates. An increasing percentage of owners reported capital outlays and higher sales.

“Small business owners are enthusiastic about the economy and have demonstrated their optimism by raising wages, creating new jobs, and investing in their businesses throughout 2018,” said NFIB President and CEO Juanita D. Duggan. “Overall, small business owners have shown a historic trend in optimism for their businesses and the economy and continue to be the driving force behind economic growth.”

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Small-business owners are very positive about their current operating environment, with high ratings on finances, cash flow and revenue driving their overall record optimism.
gallup, small, business, optimism
Tuesday, 11 December 2018 04:34 PM
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