WASHINGTON, D.C.— Small business owners optimism has increased significantly since the MetLife & U.S. Chamber of Commerce Small Business Index (Index) began tracking sentiment. According to the Q1 Index released today, nearly twice as many (47 percent) small businesses feel tax reform will help their business grow than those who think it will hurt. Even more, 54 percent believe tax reform will help the national economy.
This is the first time since the conception of the Index that the national economic outlook leads local sentiment. More than half (55 percent) of business owners see the economy in good health, up 17 percentage points from 38 percent in Q4 of 2017.
Small business owners’ optimism on the national economy appears to be correlated to their belief that tax reform will have a positive impact on business health. Among small business owners that believe tax reform will help the economy, 69 percent say the U.S. economy is in good shape with 35 percent reporting the economy is in very good shape.
“The optimism of our nation’s small businesses illustrates how much of a home run passing pro-growth tax reform has already been for U.S. workers, job creators, and the economy,” said Neil Bradley, U.S. Chamber executive vice president and chief policy officer. “National policies like regulatory relief and tax reform are giving small businesses new hope and a greater ability to invest in their business and workers, which translates into positive growth at the community and national level.”
A surge in confidence in the direction of the national economy helped push the Small Business Index up by 3 points to 66.3, the fourth consecutive quarterly increase and highest measure of confidence on record. This means 66.3 percent of small business owners have a positive outlook about their company and the small business environment in the United States.
“Small businesses are the growth engines of America, employing about half of the U.S. workforce and creating almost two-thirds of new jobs,” said Jessica Moser, vice president of Small Business Solutions for Group Benefits, MetLife. “Greater confidence in the economy can lead to additional growth and success for our small businesses, and greater opportunity for everyone.”
This optimism in the national economy is translating into small business owners’ operations and expectations. The trend in hiring continues for the third straight quarter with more small businesses (32 percent) planning to hire, up five percentage points from 27 percent in Q4 2017.
Small business owners are comfortable with their cash flow and 62 percent report they are in good health. Nearly all (90 percent) of entrepreneurs said they anticipate a good year. The optimism is shared broadly across demographic groups, with the level of optimism among minority business owners slightly higher than average (93 percent), while women-owned business optimism is lower (86 percent) than the national average.
Even though small businesses anticipate a strong year, they remain cautious, especially with how it relates to their spending approach. More than half (51 percent) of small businesses are planning to save additional profits, compared to 39 percent of small businesses who plan on investing these funds.
Among the businesses who reported they will be saving more in 2018, over a third (36 percent) currently do not have a rainy day fund, compared to 29 percent who are planning to invest more. A majority (60 percent) of these “investors” are also more likely to be comfortable with their business’ rainy day fund.
Small business owners’ sentiment about their local economies has inverted, and for the first time in the history of the Index, their perceptions on the health of their local economies dropped. Less than half (46 percent) of small businesses view their local economy health as good, down two percentage points from last quarter.
About the Small Business Index
The Index is part of a multiyear collaboration by MetLife and the U.S. Chamber to elevate the voice of America’s small business owners and highlight the important role they play in the nation’s economy. The initiative will produce the quarterly MetLife & U.S. Chamber of Commerce Small Business Index; a nationwide event series, and the annual Dream Big Small Business Awards program, which celebrates the achievements of small businesses and honors their contributions to America’s economic growth.
Please visit www.SBIndex.us for the full results and methodology.
About the U.S. Chamber of Commerce
The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations. For more information, visit www.uschamber.com.
MetLife, Inc. (NYSE: MET), through its subsidiaries and affiliates (“MetLife”), is one of the world’s leading financial services companies, providing insurance, annuities, employee benefits and asset management to help its individual and institutional customers navigate their changing world. Founded in 1868, MetLife has operations in more than 40 countries and holds leading market positions in the United States, Japan, Latin America, Asia, Europe and the Middle East. For more information, visit www.metlife.com