Surveys on small business confidence are unreliable – contradicting results
Dane Stangler ’23, February 24, Director of Strategic Initiatives at the Bipartisan Policy Center (BPC) and Senior Advisor at the Global Entrepreneurship Network, “What’s The State Of American Small Business In Early 2023?” FORBES, accessed July 18, 2024, https://www.forbes.com/sites/danestangler/2023/02/24/whats-the-state-of-american-small-business-in-early-2023/
Small Business Confidence Could Be Stable—Or Rising—Or Falling
The overall indices of confidences in these surveys shouldn’t be over-analyzed. More interesting are the components of each and the decisions that small businesses say they’re taking and why. But, confidence readings can provide a quick temperature check of how small businesses think they’re doing. As the headline suggests, the surveys seem to point in different directions.
The WSJ/Vistage Small Business CEO Confidence Index was “stable” in January, remaining close to the highest level of the previous six months. Meanwhile, there was a small increase (two points) in the CNBC|SurveyMonkey Small Business Confidence Index.
In sharp contrast, the NFIB Small Business Optimism Index has trended steadily downward since the end of 2019. Much of that deterioration appears to be from what NFIB labels the “soft” components of the index, such as expected credit conditions and outlook for expansion. The “hard” components—such as job openings and earnings—have also trended downward but not by nearly as much. As the NFIB commentary in the report notes, “if it weren’t for the Job Openings and Hiring Plans components, the Index would be much lower. ... Everything else is pretty much in the tank.”