The FINANCIAL — U.S. small-business owners’ optimism increased modestly this quarter. The Wells Fargo/Gallup Small Business Index is at +68, up from +64 in the second quarter of 2016 and nearly matching the eight-year high of +71, recorded in the first quarter of 2015.
These most recent data, collected July 6-12, are from the Wells Fargo/Gallup Small Business Index survey. The Wells Fargo/Gallup Small Business Index jumped in the first quarter of this year after posting declines for three consecutive quarters in 2015. The last three quarters’ index scores have been within a few points of each other. The current score is close to the post-recession high of +71, recorded in the first quarter of 2015.
The Wells Fargo/Gallup Small Business Index consists of owners’ ratings of their business’ current situation and their expectations for the next 12 months, measured in terms of their overall financial situation, revenue, cash flow, capital spending, number of jobs and ease of obtaining credit. Small-business owners’ assessments of these individual aspects of their current situation and future expectations are largely similar to the previous quarter. One exception is owners’ reports about the status of their cash flow over the past year have increased modestly, helping lift the overall index. Now, 60% of owners say their cash flow over the past 12 months has been “somewhat good” or “very good,” compared with 55% in quarter two.
Small-Business Owners’ Top Challenge: Attracting Customers
When small-business owners were asked to identify the most important challenge facing their business, 14% cite attracting customers and finding new business, making this the top category of mentions. Other top concerns include government regulations (12%), the economy (10%) and hiring and retaining quality staff (11%). These challenges have been consistently reported as the top concerns of small-business owners since early 2013, although the order of these concerns shifts from quarter to quarter.
Few Owners Say Presidential Candidates Are Addressing Their Issues
Small-business owners continue to say they are following news about the presidential election. The 87% of owners who are following the election either “very closely” (57%) or “somewhat closely” (30%) is identical to the 87% found last quarter.
Small-business owners are more tuned into the presidential campaigns than the general public. In a national survey of adults in mid-June, Gallup found that 77% of national adults were following the election very closely (40%) or somewhat closely (37%).
While nearly half of small-business owners (48%) say the outcome of the November presidential election will have a major effect on their small businesses, few say that the presidential candidates are addressing their concerns. One-third of small-business owners surveyed (33%) said the presidential candidates are discussing the issues most important to them as small-business owners. This is up slightly from the 28% recorded in April. In comparison, 62% of national adults in a June Gallup poll said, in response to a more general question, that the candidates are addressing the issues about which they really care.
More than half (54%) of small-business owners surveyed said they understand the candidates’ positions on the issues that would affect their business “extremely well” or “very well,” similar to the 47% who said so in April.
Small-business owners are a bit more optimistic now than they were last quarter, but from a big picture perspective, optimism has yet to show signs of returning to the higher levels recorded before 2008. Small-business owners are not, apparently, holding out much hope that the next president will make specific changes that directly affect them; a clear majority say the candidates are not addressing the issues of importance to them.