Small business confidence hits highest level since 2018, but challenges remain

WASHINGTON (TNND) — Confidence among small business owners has surged to its highest level since 2018, following the recent presidential election, according to a new survey. The CNBC and SurveyMonkey Small Business Confidence Index for the fourth quarter revealed that overall confidence climbed to 62 out of 100, marking an 11-point increase from just a few months earlier.

Mark Hamrick, a senior economic analyst at Bankrate, said the rise in confidence is understandable, given the ambitious growth plans of the incoming administration.

We could first of all take the politics out of the question to some degree, and know that the incoming administration is very ambitious about trying to unleash growth and essentially the prospects for businesses across the spectrum,” Hamrick said.

The survey indicated that political views significantly influenced business owners’ economic outlook. Republican small business owners experienced a substantial increase in confidence, jumping from 43 points to 71. Independents saw a modest rise from 51 points to 57. In contrast, Democrat small business owners’ expectations declined from 62 to 50.

“The perception about one’s personal finances and the outlook for the economy is very much based on one’s political identification,” Hamrick explained. “When your team is taking the ball downfield and crossing the line for a touchdown, you’re thinking much better about what the prospects are, and when your team is essentially taking it on the chin, as the Democrats did in this election, those people are feeling less optimistic.”

Despite the optimism, challenges remain. Bill Dunkelberg, chief economist for the National Federation of Independent Businesses, said, “Although optimism is on the rise on Main Street, small business owners are still facing unprecedented economic adversity. Low sales, unfilled job openings, and ongoing inflationary pressures continue to challenge our Main Streets, but owners remain hopeful as they head toward the holiday season.”

Inflation remains the top concern for small businesses, with prices approximately 20% higher across the board since early 2021, according to the U.S. Bureau of Labor Statistics. The impact of President-elect Trump’s economic policies on these prices remains to be seen once he takes office.

“I think broadly speaking, this is obviously going to be a much more quote, unquote, business-friendly administration, and there are going to be consequences arising from that. Some of them could be anti consumer as well,” Hamrick said.