Small business economic pessimism spikes 10 points [WSJ/Vistage Aug 2024]
![August 24 WSJ/Vistage Small Business report mother taking care of young son while working on laptop](https://myvistage.com/hub/wp-content/uploads/sites/4/2024/08/August-WSJ-featured-image.jpg)
Increasingly negative economic sentiment — combined with softer workforce expansion plans among small businesses over the next 12 months — led to the WSJ/Vistage Small Business CEO Confidence Index sliding to 83.3 in August. This is the lowest recording since last fall when rising interest rates, state elections and the potential government shutdown caused small business confidence to dip.
![Aug 24 WSJ/Vistage SB report slide 1](https://myvistage.com/hub/wp-content/uploads/sites/4/2024/08/0824WSJVistage_Slide1-1024x686.jpg)
![Aug 24 WSJ/Vistage SB report slide 2](https://myvistage.com/hub/wp-content/uploads/sites/4/2024/08/0824WSJVistage_Slide2-1024x686.jpg)
![Aug 24 WSJ/Vistage SB report slide 3](https://myvistage.com/hub/wp-content/uploads/sites/4/2024/08/0824WSJVistage_Slide3-1024x686.jpg)
![Aug 24 WSJ/Vistage SB report slide 4](https://myvistage.com/hub/wp-content/uploads/sites/4/2024/08/0824WSJVistage_Slide4-1024x686.jpg)
![Aug 24 WSJ/Vistage SB report slide 5](https://myvistage.com/hub/wp-content/uploads/sites/4/2024/08/0824WSJVistage_Slide5-1024x686.jpg)
![Aug 24 WSJ/Vistage SB report slide 6](https://myvistage.com/hub/wp-content/uploads/sites/4/2024/08/0824WSJVistage_Slide6-1024x686.jpg)
![Aug 24 WSJ/Vistage SB report slide 7](https://myvistage.com/hub/wp-content/uploads/sites/4/2024/08/0824WSJVistage_Slide7-1024x686.jpg)
![Aug 24 WSJ/Vistage SB report slide 8](https://myvistage.com/hub/wp-content/uploads/sites/4/2024/08/0824WSJVistage_Slide8-1024x686.jpg)
![Aug 24 WSJ/Vistage SB report slide 9](https://myvistage.com/hub/wp-content/uploads/sites/4/2024/08/0824WSJVistage_Slide9-1024x686.jpg)
![Aug 24 WSJ/Vistage SB report slide 10](https://myvistage.com/hub/wp-content/uploads/sites/4/2024/08/0824WSJVistage_Slide10-1024x686.jpg)
![Aug 24 WSJ/Vistage SB report slide 11](https://myvistage.com/hub/wp-content/uploads/sites/4/2024/08/0824WSJVistage_Slide11-1024x686.jpg)
Today, small businesses are impacted by higher costs of labor and elevated interest rates that increase the cost of cash. The percentage of small businesses planning to increase their fixed investments held at 28% after last month’s drop, a low not seen in 17 months. If the U.S. Federal Reserve lowers interest rates in September as many economists predict, this figure may rise in the coming months.
Adding to the unique challenges leaders face today is the uncertainty surrounding November’s general election, in particular, the race for U.S. President. Indeed, 29% of small businesses feel that sales have been impacted by election uncertainty, 17% report that they are holding off on expansion plans (8%) and investments (9%) while just 2% report that their hiring has been impacted.
Cost of labor: child care
While uncertainty about the election might not impact hiring plans among small businesses, the cost of labor — including wages, insurance and other benefits — is causing small businesses to rethink their workforce and how they might drive productivity to do more with less. Just 44% report plans to expand their workforce in the next 12 months, on par with last month’s low of 43%.
Child care has made recent headlines as a challenge for businesses. When asked about the impacts of the cost and availability of child care, more than one-third (36%) of small businesses reported that scheduling and attendance have the biggest impact, while 9% reported productivity impacts, and 7% reported wages and compensation.
Not all child care challenges result in costs to the business. Eirini Kalafatides, CEO & Creative Director of DHOME Brands in Philadelphia, says her company has found a way to maintain productivity. “As a fully remote business, we’ve found that offering flexibility to the moms on our team not only supports their work-life balance but also boosts productivity,” she says. “Flexibility and productivity really can go hand in hand, creating a more effective and engaged team.”
Making adjustments for workers managing children and aging parents is not necessarily a new issue. Indra Nooyi, the former CEO of PepsiCo, brought up the need to keep the workplace flexible and fair during a member-exclusive event with the Vistage community.
From adjusting wages to offering child care benefits, some small businesses have absorbed these costs so they can hire and retain qualified workers.
As Nathan LaRue, CEO of Kalmer Solutions in Jonesboro, Arkansas, says, ”Continued increase in child care cost has significantly impacted our employees. We have increased wages slightly more than the inflation rate.”
Other companies offer child care reimbursement, including Bruce Benator, Managing Partner and CEO of WPL CPAs + Advisors in Atlanta. “For children not yet of school age, we provide a full child care benefit up to a certain cap for all full-time associates,” he shares.
August highlights
The August WSJ/Vistage Small Business CEO Confidence Index was calculated from a survey of CEOs and leaders of small businesses between August 5-12, 2024. The results reflect insights from 401 respondents representing companies with $1-20 million in annual revenues.
- Current Economy: The proportion of small businesses that believe the economy is better than last year is just 12%, while 4 times as many (48%) think it has worsened.
- Future Economy: Less than one quarter (24%) of small business leaders expect the economy to improve over the next year, while the percentage that expects it to worsen rose 10 points to 35%.
- Revenue projections: 61% of small businesses expect increased revenues over the year ahead, holding with the 2024 average. Just 12% expect a decline, on par with the year-to-date average.
- Profitability projections: 44% of small businesses expect increased profits in the next 12 months, while 20% expect profits to decline.
- Fixed investment plans: 28% of small businesses plan to increase fixed investments over the next 12 months, while just 16% plan to reduce spending. That is slightly above the year-to-date average of 14%.
- Workforce expansion plans: Expansion plans are on hold as the percentage of small businesses that plan to increase their workforce (44%) remains near the recent low. The percentage that expects workforce contraction (9%) is at its highest since last fall.
To explore the full August 2024 WSJ/Vistage Small Business dataset, visit our data center or download the infographic.
Category : Economic / Future Trends
Tags: Economic trends, Small business, WSJ Vistage Small Business CEO Survey