Economic / Future Trends

Small businesses welcome the new year with optimism [WSJ/Vistage Dec 2023]

December 23 WSJ featured image. Snow on fir tree melting, indicating thawing.

New year. New budgets. New outlook. Small businesses are welcoming in the new year with renewed optimism, as evidenced by a near 8-point jump in the WSJ/Vistage Small Business CEO Confidence Index this past December.

Indeed, December indicates signs of a thaw, as this is the most optimistic that small businesses have been since April 2022.

The WSJ/Vistage Small Business Index consists primarily of forward-looking components. While all components of the Index rose compared to November, the primary driver of the increase in the Index is an improved economic optimism about the year ahead, no doubt fueled by the U.S. Federal Reserve holding steady on interest rates, inflation continuing to slow and, of course, a GDP that remains in growth mode, most recently spurred by spending in the holiday season.

Other signs of optimism include the growing proportion of small businesses expecting increased revenues; 62% expect increased revenues compared to 57% last month and 60% a year ago. Growing at a greater rate is the proportion of small businesses that expect increased profits, reaching 49% compared to 42% last month and 44% last year. While this might not seem like a significant shift, the profit expectations for small businesses have not been this optimistic since last spring.

There is some trepidation among small businesses when it comes to their spending plans for the new year. Just 33% of small businesses expect to increase fixed investments in the year ahead and only 21% plan to seek capital in 2024. However, with increased revenues and workforce expansion on the horizon for small businesses, the Fed’s actions surrounding interest rates in 2024 may loosen the purse strings for expansion-related investments.

December highlights

The December WSJ/Vistage Small Business CEO Confidence Index was informed by 666 leaders of small businesses who represent respondents reporting annual revenues of $1-20 million in the Q4 Vistage CEO Confidence Index survey conducted December 4-18, 2023.

Highlights include:

  • Current Economy: While just 20% of small businesses report that the U.S. economy has improved compared to one year ago, this is a 7 percentage-point improvement from November.
  • Future Economy: The proportion of small businesses expecting the economy to get better in the year ahead grew 10 points from last month, while the proportion that expect it to worsen declined 12 points.
  • Revenue projections: 62% of small businesses expect increased revenues in the next 12 months, a 5-point improvement from last month. This is the highest proportion expecting increased revenues since April 2022.
  • Profitability projections: The proportion of small businesses who expect increased profits in the next 12 months grew at a greater rate than those expecting increased revenues with nearly half (49%) expecting increased profits while 18% expect them to decline.
  • Fixed investment plans: Just one-third (33%) of small businesses plan to increase fixed investments, while 17% plan to reduce spending in the next 12 months.
  • Workforce expansion plans: Nearly 6-in-10 small businesses (57%) plan to expand their workforce in the new year.

For deeper insights and to explore the full dataset of the December 2023 WSJ/Vistage Small Business data, visit our data center or download the infographic.

Category : Economic / Future Trends

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About the Author: Anne Petrik

As Vice President of Research for Vistage, Anne Petrik is instrumental in the creation of original thought leadership designed to inform the decision-making of CEOs of small and midsize businesses. These perspectives — shared through repo

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