Small business owners are doing OK – but will that help Trump overcome his low approval ratings?
Surveys indicate small business owners in the US are experiencing stable confidence and solid revenues, despite concerns about inflation and labor shortages.
Intelligence analysis by Gemini 2.5 Flash Lite
While overall economic sentiment for Donald Trump is poor, small businesses, a significant voting bloc, show a surprising level of confidence. Despite challenges like inflation and a tight labor market, many report stable cash flow, job additions, and revenue growth, suggesting a more resilient economy than some headlines imply.
Imagine a big party where most people are worried about the music and the food. But the people running the small food stalls at the party feel pretty good about their own sales and are even thinking about adding more helpers. They're doing okay, even if the overall party vibe isn't super cheerful.
Analysis
Small Business Optimism Index
The National Federation of Independent Businesses (NFIB) Small Business Optimism Index, a key barometer for this sector, has dipped slightly below its long-term average. This indicates a subtle but present rise in uncertainty among owners. The primary concerns identified are the quality of labor, cited by 26% of respondents, and inflation, a worry for 20%. While expansion plans have softened, a notable 17% of small businesses still intend to increase their workforce in the coming three months, suggesting a degree of forward-looking investment despite prevailing headwinds.
Justworks/US Chamber Small Business Index
In contrast to the NFIB's slight dip, the Justworks/US Chamber Small Business Index reveals a more optimistic picture, with confidence improving significantly in the third quarter. A substantial 72% of the 750 surveyed small businesses feel comfortable with their current cash flow. However, this internal comfort does not fully translate to a positive view of the broader US economy, as only 27% believe it is in good health. Inflation remains the paramount issue, impacting 54% of owners, underscoring its pervasive influence on business operations and consumer behavior.
Hiring and Revenue Trends
Data from HR platforms like Gusto and ADP paints a picture of steady, albeit not explosive, job growth. Gusto reported 28,000 jobs added by small businesses in September, marking the eighth consecutive month of gains. Notably, this growth is broad-based, including smaller employers and sectors like healthcare. ADP's figures show a similar acceleration in private-sector hiring. Paychex data indicates stable employment among companies with fewer than 50 employees. Intuit's QuickBooks data, however, presents a slightly different view, showing a dip in employment for the smallest businesses (1-9 employees) in September. Despite mixed hiring signals, revenue appears robust. Intuit's data highlights a 1.68% increase in inflation-adjusted average monthly revenue, with growth across most industries and regions. Fiserv's payment processing data also points to improving sales, though consumer behavior remains selective, with weaker traffic but higher spending per transaction.
Key points
- Small businesses are a significant economic voting bloc in the US.
- Surveys show mixed but generally stable confidence among small business owners.
- Inflation and labor quality are the top concerns for small business owners.
- Hiring has shown consistent gains, though Intuit data suggests a dip for the smallest firms.
- Revenues remain solid, with inflation-adjusted monthly revenue showing growth.
If small businesses continue to navigate inflation and labor challenges successfully, their resilience could bolster overall economic growth. Sustained revenue increases and job creation by this vital sector could lead to a more stable and positive economic outlook, potentially influencing consumer confidence and investment.
Persistent inflation could erode small business profits and consumer spending power, leading to reduced expansion plans and potential job losses. If labor shortages worsen, it could stifle growth and force businesses to cut back on services or operating hours, negatively impacting the broader economy.
