Optimism remains high among small business owners across the nation despite recent doom-and-gloom economic forecasts, according to the National Federation of Independent Business.
“In spite of the success we continue to see on Main Street, the manic predictions of recession are having a psychological effect and creating uncertainty for small business owners throughout the country,” NFIB President and CEO Juanita Duggan said in a Sept. 10 press release. “Small business owners continue to invest, grow, and hire at historically high levels, and we see no indication of a coming recession.”
The NFIB has collected Small Business Economic Trends (SBET) data with monthly surveys since 1986 and quarterly surveys since 1973. NFIB recently asked businesses if changes in trade policy with China impacted their business.
In June, the SBET survey showed that 30 percent of a random sample of NFIB members reported their businesses were somewhat or significantly negatively impacted by the recent trade policy changes with China.
“The industries that are most impacted are manufacturing, wholesale, agriculture, and retail. Those are the big ones,” said NFIB Director of Research Holly Wade said in an interview with The Epoch Times.
Farming was the most affected, with 26 percent of respondents in the agricultural sector reporting that they have seen a significant negative impact.
“However, when we look at it in a larger context, it’s not moving the needle much when it comes to the overall health of the small business economy,” Wade said.
Small businesses are still expanding, hiring new employees, increasing wages to attract and retain workers, and are raising prices slightly to absorb some of those costs and capital expenditures, she said.
“We have an uncertainty index that looks at those who don’t know whether business conditions are going to be better or worse … so, there is a larger percentage of small business owners who are in a state of limbo, wondering what’s going to happen,” Wade said. “How the tariffs manifest themselves in the coming months is taking a bit of a toll on small business owner sentiments in terms of how they see things in the future—how they see business conditions in three to six months … but not to the degree that it’s pulling down overall sentiments significantly.”
Generally, the small business economy remains strong and optimism remains high, according to the SBET survey for August, she said.
“We are still in the top 15 percent of all optimism index readings, so while optimism dipped a bit to 103.1, it’s still historically a very strong number and we don’t see any headwinds in sight. We benchmark it at 100, so 100 is your average good year,” Wade said.
“Before the 2016 election, we had been below 100 basically since the recession,” she said. “Afterwards, optimism improved significantly and we have been in the 104-107 range. We had a record high last August (2018) when we hit 108.8.”
China has moved steadily and silently into U.S. markets for at least two decades, heavily impacting the American mining, medical, and manufacturing sectors. China’s phenomenal economic growth was largely considered benign until President Donald Trump put the spotlight on the regime’s unfair trade practices, including currency manipulation and intellectual property theft, before, during and after his election campaign.
Meanwhile, 67 percent of registered voters said Washington should confront China’s unfair trade practices, based on a recent Harvard/CAPS Harris Poll survey. The poll also found that 74 percent of voters believe American consumers will bear the cost of tariffs, with 63 percent saying tariffs on Chinese imports would ultimately hurt the United States more than China.
“When we look at the hierarchy of issues that concerned small business owners up until 2016, exporting their products, costs of imports, supplies, and inventories didn’t really register on the radar as their top concerns,” Wade said. “Their top concerns overwhelmingly were the cost of health insurance and a variety of tax issues and regulations, and for the most part were very domestic.”
In the short term, small business owners can absorb higher costs from increased tariffs by accepting lower profits, but eventually the higher costs will be reflected in the price the consumer pays for products, Wade said.
“It has to be that way or the business loses money and it ceases to exist.” she said.
Besides the survey results, Wade said there has been feedback from many NFIB members who see the potential benefits of short-term pain for long-term gain in leveling out the economic playing field in trade negotiations with China.
“There is that population of business owners who agree and believe that at the end of this we will be in a better environment to move forward with trade with China. Anecdotally, we’ve certainly heard from business owners who … are frustrated with where we were in terms of trade with China and feel like the [Trump] administration is doing the right thing by working through this, and that we’ll generally be better off on the other side of it,” said Wade.
“And then there are those that are negatively impacted who want it to be resolved as quickly as possible so that they can get on their feet, move forward and take advantage of the strong economy,” she said.