Even in the face of stubborn inflation, small business owners are striking a more positive tone. Optimism surrounding the economy is rising and the CNBC|SurveyMonkey Small Business Confidence Index reached its highest level since President Joe Biden took office, according to the latest quarterly data released on Thursday morning.
Twenty-eight percent of small business owners describe the current state of the economy as “excellent” or “good,” up five percentage points from the prior quarter and up from 18% year over year, according to the CNBC|SurveyMonkey Small Business Survey for Q1 2024. It’s the most optimistic respondents to the survey have been since CNBC and SurveyMonkey began asking this question in Q2 of 2022.
The Small Business Confidence Index reading of 47 out of 100 marked the highest reading since Joe Biden took office in the first quarter of 2021.
A recent string of data has found consumers and small business owners beginning to show more confidence about the economy, even as challenges linger.
“We’re kind of seeing a potential turn around the corner in terms of small business optimism,” said Sam Gutierrez, senior research scientist at SurveyMonkey, pointing to an uptick in survey responses about economic strength and the general direction in the fight against inflation after two years of stagnation in this survey data.
The Q1 survey was conducted online from January 22 to February 1, 2024, among a national sample of 3,119 self-identified small business owners ages 18 and up using SurveyMonkey’s methodology.
Inflation — which has proven to be stubborn based on the most recent data even as significant progress has been made in bringing prices down from a peak level — continues to weigh on owners, with nearly a third saying it is currently the biggest risk to business. That is more than double the amount who cite consumer demand, interest rates, labor shortages and supply chain disruptions as key issues.
“Inflation is still top of mind,” Gutierrez said. “But we’re seeing this cautious optimism on inflation, and costs in general.”
Confidence in the Fed to control inflation is now at 35% among small business owners, the highest it has been since the beginning of 2022. The percentage of business owners (29%) who say inflation has peaked, while it remains a minority of the survey audience, is also at its highest level since the beginning of 2022.
Inflation is part of how owners surveyed say they will evaluate candidates for the 2024 election, with 60% of small business owners reporting inflation and interest rates are their top issue when it comes to deciding who to vote for in November, along with economic growth (60%), followed by tax policy (51%).
Inflation woes have hit John Morman’s small business, Celtic Tides, over the course of the last year. Morman imports and sells items from Wales, Ireland and Scotland, including kilts, jewelry and more. The Lexington, Virginia-based business just celebrated its 25th anniversary.
John Morman and his wife Mary Jo run Celtic Tides, a small retailer in Lexington, VA, selling imported items from Wales, Ireland and Scotland.
John and Mary Jo Morman
“When you deal with an imported item, rising costs hit us from several directions. The cost of international freight has risen. The cost of the items that are made in the places we buy our products from, their costs have all increased, the value of the dollar has dropped,” he told CNBC, adding that his costs have gone up by as much as 15% but he has passed on less than half of that to the consumer.
“We hold off on price increases, absolutely, as best we can. But inevitably, some of those costs do have to be passed on,” he said.
Right now, Morman’s top concern is a lack of consumer spending, even though he’s feeling on the whole that this year will be better than the last.
“It’s been a very strange year so far. There have been times when normally we would be busy and we haven’t been, and times when we would normally expect to be quiet and we’ve been busy, so the year so far is lagging behind last year. So as a community we’re, as I say, we’re a little concerned,” Morman said. “I think there is still a lot of concern over rising costs.”