Optimism about the future of the U.S. economy is on the rise among small business owners and CEOs, a new survey shows. Despite challenges posed by federal spending cuts, health care costs, increasing taxes, and a still-high unemployment rate, The Wall Street Journal's February survey revealed that 35% of respondents believe economic conditions will improve over the next 12 months.
The February response from small businesses marked a significant improvement over January, when only 26% of survey respondents expected conditions to improve. It far out-paced November, too, when just one-fifth of CEOs and small business owners anticipated better economic times ahead. Plus, only 16% of respondents said in February that the economy will worsen in the year ahead – notably less than the 43% who anticipated a decline four months ago. "Small business owners are very in tune to the economy and are much more nimble than larger companies when it comes to changing course," says Terry Robinson, president of Sunovis Financial. "If they can overcome issues such as access to capital, this may clear more way to increased optimism."
Started last June, the survey's "confidence index" was set at a baseline of 100. In November, the index was a meager 83.4, while in January it read 94.2. But last month, the index shot up to 101.4 – the highest monthly reading since its inception. That suggests small business owners' confidence is on the rise and poised to grow even more. "Their confidence wasn't shaken by public-policy debates," says Richard Curtin, an economist at the University of Michigan who analyzed the survey results. "They expect the upward momentum of the economy to outweigh those concerns."
The Wall Street Journal/Vistage Small Business CEO Survey is a monthly indicator that assesses the outlook of businesses with less than $20 million in annual revenues.