Tariffs erode small business projections, according to June 2019 CEO survey

Economic confidence among small businesses fell to its lowest level since the start of the year, which can largely be attributed to the negative impact of tariffs on sales and profits, according to a survey conducted by Vistage and The Wall Street Journal. The monthly survey was conducted June 3-10 and captured input from 720 CEOs and other leaders of small businesses across the United States.

The WSJ/Vistage Small Business CEO Confidence Index fell to 95.8 in June, staying barely above January’s Index of 95.2, which was the lowest level under the Trump administration. Of the six components that make up the overall Index, small business CEOs’ perceptions about recent and future economic conditions declined the most.

Economic slowdown

According to Dr. Richard Curtin, an economist from the University of Michigan who analyzed the data,  “Not only did small firms report that a slowdown in the economy had already started, but one-third of all firms expected economic growth to continue to decelerate through the next 12 months. Just 15% of CEOs anticipated a faster pace of growth during the year ahead.”

The survey recorded incremental declines in the number of small firms expecting revenue and profit growth.  Curtin suggests that the declines may have been due to the collapse of trade negotiations as well as the impact of tariffs. “While the impact on the entire U.S. economy will be slight, the impact on an individual firm could be substantial,” he explains.

While expansion plans of small firms have softened, they have been the least impacted by the economic sentiment.  “Overall, the small declines in hiring and planned fixed investments stand in sharp contrast to the more substantial declines in prospects for the entire economy,” Curtin says. “This divergence could simply reflect a higher degree of uncertainty about overall economic prospects, with small firms hedging their bets by making only modest cutbacks in hiring and investments.”

Download the June report for more perspectives from small business CEOs, including:

• Sentiments
  on the recent and future performance of the U.S. economy
• Revenue and profitability
  expectations
• Expansion
  plans for hiring and investments

About the WSJ/Vistage Small Business CEO Survey

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