Shifting tariffs elevate uncertainty among small businesses, shows August WSJ/Vistage survey

In August, economic confidence among small firms fell to its lowest level since November 2012, according to a survey conducted by Vistage and the Wall Street Journal. The survey was conducted August 9-16 and captured input from 673 CEOs and other leaders of small businesses across the United States. The WSJ/Vistage Small Business CEO Confidence Index was 92.9 in August, down from last month’s 99.8 and last year’s 107.8. This level is among the index’s lowest; since the survey began in June 2012, the index has only fallen below this level twice.

Analysis of the August survey revealed that the largest declines were in the expected strength of the economy during the year ahead: About 40% of CEOs said they expect the economy to worsen, up from 29% last month and nearly twice last year’s 23%. CEOs also expressed concern over the potential for new tariffs. In the survey, 45% of respondents reported that additional tariffs would have a negative impact on their business.

According to Dr. Richard Curtin, an economist from the University of Michigan who analyzed the data, “this falloff in CEO confidence may be overstated, since the data were collected after the announcement about additional tariffs on goods from China but before the announcement that some of the tariffs would be delayed until mid-December. Given the delay until mid-December, one might anticipate a temporary rebound in overall confidence next month, tempered by an increase in uncertainty about tariff policies.”

Curtin suggested that interest-rate cuts may impact the behavior of small firms in the coming months. “The recent cut in interest rates has been advertised by the Fed as a precautionary step to avoid a potential recession,” he said. “Rather than sparking renewed optimism, the rate cut, and any additional cuts, are likely to cause small firms to follow the Fed’s lead by adopting more cautious plans for investment spending and hiring as a recession hedge.”

Download the full report for more perspectives from small-firm 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

Interactive data: https://vistageindex.com/

Download the infographic here.