The economic confidence expressed by small firms has slowly declined since the start of 2015, falling to its lowest level in nearly two years, according to an October 12-21, 2015, survey of 644 small business CEOs and business owners.
The WSJ/Vistage Small Business CEO Confidence Index was 101.9 in October, down from 103.7 in September and the peak of 115.5 at the start of 2015. While it may seem clear that a peak was recorded at the start of 2015, the key question is whether it will also constitute a cyclical peak. Even given the atypical nature of the expansion, the data only indicate a slower, but still positive, rate of economic growth. The primary reason for the erosion of confidence has been the continued weakness in the economy. This has diminished the willingness of small firms to make investments in new plant and equipment as well as expand their workforce.
To be sure, very few firms expected the economy to fall into recession, as just one-in-seven anticipated that the economy would actually worsen. The majority of small firms expected economic growth to remain on the same uneven path as at present, with a below average quarterly growth rate in the current quarter to be followed by above average growth.
Importantly, despite the lackluster performance of the economy, the majority of firms anticipate continued growth in their own revenues and profits. It is nonetheless of some concern that small firms have begun to limit investments and hiring due to uncertain prospects for the economy as well as uncertainty about monetary policy.
To learn more, see the interactive tool and view results from previous months.
Ready for more? Browse additional articles in Vistage CEO Confidence Index!