Small-Business Optimism on the Rise

Small businesses indicate the forward momentum of the U.S. economy will benefit them, despite a rise in tax rates and health care costs.

A slew of challenging economic conditions hasn't dampened the spirits of the small-business community in the United States, as small-business owners and CEOs are becoming more optimistic about the future of the U.S. economy, according to a Wall Street Journal survey.

The survey, led in conjunction with peer advisory specialist Vistage, was conducted among small-businesses owners with businesses with less than $20 million in annual revenue. The results revealed that even with looming federal spending cuts, rising health care costs and tax rates, and continuing high unemployment, 35 percent of survey respondents said they expect improved economic conditions in the coming 12 months.

"Small-business owners are very in-tune to the economy and are much more nimble than larger companies when it comes to changing course," Sunovis Financial President Terry Robinson said in a statement. "If they can overcome issues such as access to capital, this may clear more way to increased optimism."

In November 2012, just 20 percent of the small-business owners surveyed saw the economy improving in the next 12 months, while January saw 26 percent expecting an improvement in the U.S. economy.

At the inception, the survey confidence index was set at a baseline of 100. February's confidence index was at an all-time high of 101.4. That compares with November's confidence index of just 83.9 and even January's reading, which came in at 94.2. Based on this survey's results, the report concluded that confidence is "increasing rapidly" among small-business owners.

This anticipation for increased sales and profitability translates into more than half of the small-business owners surveyed saying they hope to increase the size of their staffs and 39 percent who said they anticipate an increase in capital expenditures. This compares with 47 percent and 32 percent who responded the same way in January.

"Their confidence wasn't shaken by continuing public-policy debates," Richard Curtin, an economist at the University of Michigan who analyzed the results, said in a statement. "They expect the upward momentum of the economy to outweigh those concerns."

Despite the encouraging results of the survey, a February report from the National Federation of Independent Businesses (NFIB) indicated small-business owner confidence continues to drag. While actual job creation and job-creation plans improved nominally, they were still not enough to keep up with population growth, according to the report.

On the job-creation front, 43 percent of owners surveyed said they hired or tried to hire in the last three months and 34 percent (79 percent of those trying to hire or hiring) reported few or no qualified applicants for open positions. Overall job creation was positive in January, but "ever-so-slight," with just 11 percent of surveyed owners adding employees in the past few months, and 9 percent saying they reduced employment.