Scholars and political strategists have long observed a tendency among voters to seek change in leadership during periods of economic hardship, a phenomenon rooted in the belief that new leadership may offer solutions to pressing economic challenges. Our recent quarterly polls have highlighted small business owners’ concerns about inflation and other difficulties faced during the Biden administration.
Post-election, optimism is on the rise in the small business community.
In the Q4 2024 CNBC|SurveyMonkey Small Business Survey, the small business confidence index has climbed to 62 out of 100, up 11 points from 51 in Q3 of 2024, and 16 points higher than Q4 of last year (at 46).
Republican business owners’ optimism is driving the surge in positive sentiment. Notably, small business owners who identify as Democrats report a decline in business sentiment, from 62 in the previous quarter to 50 in Q4. However, this decline is not enough to offset the massive jump in sentiment among Republican business owners — 28 points quarter over quarter. Independents recorded a small bump, from 51 points in Q3 to 57 points in Q4.
The online poll was conducted Nov. 11-Nov. 18 among a sample of over 2,700 small business owners.
Trump tariffs and partisan sentiment
While small business sentiment climbed, owners express concerns about the unknown when it comes to increased trade restrictions and the possibility of higher costs for imported goods and materials under a new upcoming presidency.
When it comes to tariffs, concern is split almost 50/50. Over half (54%) of small businesses overall are “not at all concerned” or “not too concerned”, while 46% are “very or somewhat concerned.”
When you slice the data based on political affiliation, 76% of Republican business owners show little to no concern about the proposed tariffs, compared to 22% of Democrats. Conversely, 78% of Democrat business owners are “very or somewhat concerned”, compared to only 24% of Republican business owners.
Tariff troubles are further split along party lines. Four in ten (42%) small business owners expect President-elect Trump’s proposed tariffs to impact their business, compared with 33% who anticipate no impact. Republican business owners are more likely than Democrats to think that tariffs will not impact them (48% vs. 16%). Two in three (64%) Democrats think tariffs will affect their business, compared to just 31% of Republicans.
Interestingly, only one in four (23%) small business owners are taking preemptive action ahead of the proposed tariffs, with more than half not expecting to take any action (56%), and one in five unsure (20%).
Agreement on an inflation peak
The findings of the survey reflect encouraging sentiment on inflation, and an outlook that is less partisan. Forty percent of small business owners feel that inflation has reached a peak, up from 33% the previous quarter — and including 45% of GOP respondents and 40% of Democrat respondents. While inflation continues to rank as the top concern for small business owners, only 28% cite inflation as their largest risk, down from 38% the previous quarter.
Confidence in the Federal Reserve’s ability to control inflation reached a new high in this quarter’s report, but the Fed remains an issue where partisan division is significant. Nearly half (45%) of small business owners are “very or somewhat confident” in the Fed’s ability to control inflation, up 11 percentage points from the previous quarter (34%). But 68% of Democratic Party respondents are included in that average, versus 31% of Republican respondents.
With the findings from the latest CNBC|SurveyMonkey study reflecting a surge in confidence and optimism, the question moves to whether this trend will endure long term. It remains to be seen how new economic policy actually impacts these entrepreneurs’ and their businesses as a new administration takes shape.
—By Eric Johnson, CEO, SurveyMonkey