It seems that everyone is starting to feel better about the economy—including small business owners.
New survey data from American Express, released on Wednesday, shows that optimism among small businesses is on the uptick in recent months, with 85% of small businesses saying they were satisfied with the success of their business during 2023, and 86% saying they hit their goals. That reflects rosier feelings among the small business community than last summer, when Amex data showed that 80% of small businesses reported that long-term financial confidence was “being negatively impacted by the economy.”
“Our latest data shows small businesses are optimistic even in an uncertain environment. They’re managing higher rates, higher operating costs, inflation, and more, but we continue to see consistently that they’re exhibiting resilience,” Gina Taylor, Amex’s executive vice president and general manager of Business Blueprint and Banking, tells Fast Company.
The uptick in optimism mirrors the increased confidence and sentiment around the economy from the American populace at large. Consumer sentiment has increased almost 30% since November, according to data from the University of Michigan, which marked the largest two-month increase since the early 1990s. That data also showed that short-run business outlook had increased 27%.
Stability breeds good feelings
Taylor says that a lot of the increase in optimism involves leveling inflation rankings—despite the most recent CPI numbers, released on Tuesday, which were hotter than expected at 3.1%—and businesses learning to manage in an uncertain economic environment. “I think they’ve found that 2023 was more stable relative to the prior two years; they’ve found ways to focus on being more efficient and focus on profitability during that time,” Taylor says.
“We’re seeing more stability for them, and as a result they are feeling more optimistic,” she adds.
Stability, in other words, looks like the main driver of increased optimism, after a few years of contending with the pandemic and subsequent economic fallout. The dust has settled to a large degree, after a bout of relatively high inflation and a series of interest rate increases, and business owners are able to get a handle now on the macro environment and plan accordingly.
American Express’s data also shows that 50% of the businesses surveyed plan to grow or expand in 2024—a data point that may comfort some job-seekers after many large companies laid off thousands of workers in January and early February.
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