Let’s start with the latest quarterly small business index from Gallup and Wells Fargo, which showed the highest level of optimism among small business owners since January 2008, just as the recession was beginning. The readings, based on a survey of roughly 600 business owners, take into account employers’ feelings about the state of their companies currently as well as their forecasts for the coming months.
A number of factors have contributed to the surge in overall optimism, including a steady rise in owners’ perception of their financial health.
As shown above, nearly two thirds of small business owners currently find themselves in a good financial situation, the highest reading since the beginning of 2008. Sixteen percent, meanwhile, say they are in a somewhat or very poor financial situation, the lowest since 2008.
It’s the same story when business owners are asked to look ahead. Seventy-three percent expect to be in good financial standing one year from now, while 12 percent expect to be in poor financial standing — once again, the widest gap since the recession started in 2008.
Of course, making money tends to help lift employers’ spirits, too.
Nearly half of small business owners (49 percent) say revenue increased in the past year, the highest reading since 2007. The share that reported a drop in revenue (25 percent) is also the smallest that number has been since (seeing a pattern here?) early 2008.
“With the economy improving every day, many business owners are seeing stronger revenues and are feeling a renewed sense of confidence,” Lisa Stevens, head of small business at Wells Fargo, said in a statement.
Now we know what question elected officials are likely to ask: Has all this booming optimism and growing revenue led to new jobs?
In a word, yes.
According to the survey, the share of small businesses adding workers has not been higher – and the share shedding workers has not been lower – since the middle of 2007. Not shown above are the numbers concerning hiring plans for the coming year, in which 23 percent of those surveyed say they intend to expand.
The number expecting to shrink? Seven percent.
In addition to feeling upbeat about their businesses, employers are increasingly pleased with the state of the economy. New polling released by the National Small Business Association suggests that 56 percent of owners believe the national economy is better off than it was five years ago, up eight points from those asked the same question last year.
While that’s not entirely surprising, given that the economy was just pulling out of the recession five years ago, a similarly large share (45 percent) think the economy is in better shape now than it was just one year ago.
“Today’s economic outlook of America’s small-business owners is better than it has been in quite some time,” NSBA’s researchers wrote in the organization’s year-end economic report.
But will the recovery continue? Many small business owners think so.
As illustrated above, the number of owners who expect the economy to expand in the coming year spiked in the second half of 2014, with 40 percent of respondents now anticipating economic expansion during 2015. That’s essentially double the level of economic optimism we have consistently seen over the past seven years.
Bank of America researchers conduct similar polling and – while this isn’t always the case – their results have been very similar lately. Over the past six months, the portion of small business owners saying that the economy has strengthened, that their respective sectors have strengthened, and that they believe both of those will continue to strengthen in the next months have all jumped significantly (note the arrows below).
In fact, when discussing matters pertaining to the economy, their finances and finding employees, there’s only one item of business that has become more troubling for employers – and that’s their inability to find enough qualified candidates to fill all their job openings.
Moreover, many of the concerns that have plagued small business owners in recent years – such as health care costs, slowing consumer spending, government regulations, commodity prices, and so on – have all eased since last summer. In fact, none of the threats tracked by Bank of America are weighing as heavily on small employers’ minds today as they were just six months ago.
“Economic optimism is running high,” Robb Hilson, the bank’s top small-business executive, wrote in the company’s latest report. “We’re excited to see how small business owners’ enthusiasm and increased confidence will shape their plans for long-term business growth.”
In other words: