The Q1 MetLife & U.S. Chamber of Commerce Small Business Index rose to 66.3, up three points from Q4. A turnaround in confidence in the direction of the national economy contributed to the boost, making it the fourth consecutive quarterly rise and the largest increase on the Index record. This means 66.3% of small business owners have a positive outlook about their company and the small business environment in the United States.
Rebounding national economic outlook leads local sentiment for the first time. Small businesses’ perception of the national economic climate has warmed considerably, with a majority of business owners (55%) feeling positive for the first time since the survey’s inception, amid tax reform optimism.
Although optimistic, small businesses are still taking a cautious approach. While anticipating a strong year, small businesses plan on spending conservatively, with more small businesses expecting to save profit (51%) rather than invest profit (39%).
Small business owners are twice as likely (47%) to think tax reform will help their business than those who think it will hurt their business (23%). Nearly half of all small business owners believe tax reform will help their business grow. Even more (54%) believe tax reform will help the national economy.
More small businesses are planning to hire this quarter (up to 32% from 27% last quarter). This marks the second quarter in a row that hiring plans have increased.
Confidence about tax reform depends on business size, region, and demographics. Manufacturers (50%), larger small businesses (51%), and those in the Northeast (58%) are the most enthusiastic about tax reform. Small businesses in the West lag (37%). Women (44%) and minority-owned businesses (30%) are less confident that tax reform will help their business compared to men-owned businesses (48%).
One in three businesses (33%) does not have a rainy day fund. Businesses without emergency funds are more likely to rely on loans, gifts from friends and family, or credit cards to keep their business open if they encounter unforeseen expenses.