Small Business Owners' Confidence in the Economy Nears Pre-Pandemic Highs

By Alyssa Khan, Inc. (TNS)

Small business owners are more optimistic than they have been since early 2020, according to the Q3 Small Business Index.

The latest survey of small businesses from MetLife and the U.S. Chamber of Commerce, the Q3 index shows that overall confidence in the economy is up (33% of those surveyed said the economy is in good health, compared to 24% in the Q2 survey). The number of business owners who are confident about the state of local economies also increased this quarter, from 30 to 38%. However, the most striking statistic from the survey comes from the overall index score, which hit 69.2 this quarter, the highest rating since the onset of the COVID-19 pandemic.

This increase in overall optimism isn’t just fueled by confidence in the economy. Sixty-six percent of business owners reported positive feelings about their companies’ health, up from 59% last quarter. Over 70% of respondents said they are comfortable with the state of their business’s cash flow.

Despite small business owners’ overall confidence, inflation remains a prominent concern: Over 50% of surveyed business owners said inflation is their top challenge. Concerns about interest rates took a dip, however, measuring 17% compared to 23% last quarter.

Also top of mind are salary expectations. Fifty-six percent of respondents reported concerns about their ability to meet employees’ wage demands.

These challenges align with business owners’ increasing concerns about employee retention. Over half of those surveyed said they are specifically concerned about employee stress and burnout leading to retention issues. Most respondents (70%) said their business offers some form of wellness benefits, including mental health breaks and partial to full reimbursements for child care, although a growing number of business owners (14%, compared to 10% in Q1) say that their ability to afford health care and other benefits is a top concern.

“Main Street employers are showing remarkable resiliency in the face of high inflation and a shortage of workers,” said Tom Sullivan, vice president of small business policy at the U.S. Chamber of Commerce, in a press release. “With fears of a recession likely in the rearview mirror and inflation starting to ease, small business owners are feeling a lot better than they were a year ago.”

Looking ahead to 2024, business owners continue to hope for the best, with most (71%) anticipating that their annual revenue will increase next year.

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