WSJ/Vistage Jan. 2020: Confidence of small businesses rises

After decelerating for most of 2019, confidence of small business CEOs improved in January, according to analysis of the most recent survey conducted by Vistage in partnership with the Wall Street Journal.

The WSJ/Vistage Small Business CEO Confidence Index rose to 102.2 in January 2020, up from 97.4 in December and a 7.4% increase from last January’s Index of 95.2. This was the largest year-over-year gain since November of 2017.

What drove this increase?

While five of the six factors that comprise the Index rose compared to last month, the biggest gain was CEOs’ perception about the U.S. economy.

According to analysis of the January survey, three times as many small business CEOs reported that the economy had improved rather than worsened; 36% reported the economy recently improved compared to just 11% that indicated it worsened. While this gain is a good sign, we’ll be looking for subsequent increases in the coming months before we can safely state that CEOs have regained optimism.

According to Dr. Curtin, a researcher from University of Michigan who analyzed the results, “Those gains may be difficult given the long expansion, the likely dominance of tax and spending proposals in the elections, persistent uncertainty about future trade and tariff policies, and an assortment of geopolitical risks.”

Curtin adds that, “The prime takeaway is not that small business CEOs expect a resurgent pace of growth, but that they believe the record economic expansion will continue for another year due to a reasonably strong job market as well as continued strength in consumer spending.”

Revenue and profit expectations increase

While the increase in confidence about the economy was the biggest gain to last year, revenue and profit expectations have climbed as well, posting increases to last month and last year. Nearly three-quarters (74%) of small business CEOs expect increased revenues in the next 12 months, which is the highest since late 2018. Profitability expectations are at the highest level reported since September 2018, with 62% of small business CEOs expecting increased profitability.

These findings are based on the monthly WSJ/Vistage Small Business survey, which was conducted January 6 – 13, 2020 and gathered 711 responses from CEOs and other leaders of small businesses in the U.S.

Download the January report for the complete analysis.

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