Small Business Outlook on the Economy

The latest Discover Financial Services “Small Business Watch” survey was released on Monday, August 31. The best that can be said seems to be that small business owners’ lack of confidence in the economy may have bottomed. Clearly, the readings from small businesses are still anything but rosy.

A few key findings on the August survey:

• 43% of small business owners believe the economy is getting worse – the lowest level in the survey’s three-year history – while 38% see it getting better. Meanwhile, 15% see it staying the same.

• 48% of small business owners ranked the economy as poor, 41% fair, and only 9% as good or excellent.

• As for their own firms, 30% saw economic conditions improving, 43% getting worse, and 23% unchanged.

• In addition, 27% of small business owners said they were going to boost spending on business development, 43% said reduce, and 25% no changes.

The only real positive that can be pulled from this survey is that the negatives were a bit less negative than in recent months. According to this poll, most small business owners clearly are still quite sour on the economy.

Considering the importance of small business to economic growth, innovation and job creation, perhaps our elected officials at the federal, state and local levels should take note. Rather than focusing on big spending programs, a pro-growth course includes tax and regulatory relief to help reinvigorate confidence and investment among our nation’s entrepreneurs.

That, however, would require a major shift in thinking among many in power right now. For example, the current plan is to sock America’s entrepreneurs and investors with higher personal income, capital gains, dividend and death taxes over the coming 16 months, while also increasing energy and health care costs in the future. That is anything but pro-small business, and therefore is bad for the economy.

Source: Raymond J, Keating, Small Business & Entreprenurial Council News, September 3, 2009

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