For 15 years now, PNC Bank of Pittsburgh has surveyed small to mid-sized business owners across the nation to check the pulse of the economy from their unique vantage point. This month the rate of optimism among business owners has reached levels never-before seen in the history of the bank’s PNC Economic Outlook. The report is a biannual telephone survey of small and mid-sized business owners.
Fully 88-percent of those surveyed nationwide are optimistic about the near-term outlook on the national economy, up from 71-percent in the fall and from 56-percent last spring. In fact, 89-percent are optimistic about their local economy, up from 77-percent in the fall of 2016 according to the survey.
Gus Faucher is Chief Economist of the PNC Financial Services Group. He says, “The hope we had noted in the fall survey, has for many, turned into enthusiasm and is consistent with other indicators of improved confidence.” He adds, “It remains to be seen, however, if this increase in optimism will convert into improvement in real economic activity.”
The numbers nationally are mirrored by Michigan business owners when separated out with 87-percent optimistic about the national economy and 85-percent looking to good things in the local economy. Those numbers are also substantially higher than earlier measures including the 70-percent optimism for the local economy and 55-percent for the nation expressed a year ago by Michigan companies.
PNC Economist Kurt Rankin told reporters the Michigan results also align well considering the state’s economy and how well it has been performing.
On the national scale, survey participants expect their own company’s performance leaped to 94-percent who are optimistic over the next six months as compared to 85-percent who scored optimism in the fall and last spring.
Further, 62-percent of the business owners surveyed, including in Michigan, anticipate sales increased in the next six months for the highest such score in ten years since the spring of 2007, while 57-percent anticipate an increase in profits, also the highest in 12 years dating back to 2005, and 28-percent of which expect to increase full-time hiring, the highest such proportion in five years since the spring of 2012.
Faucher says, “Though economic fundamentals have not changed appreciably since the fall, it is encouraging that business owners are anticipating greater sales and profits,” noting, “Those are key indicators we look for when predicting broader economic growth.”
The survey also examined business owner’s thoughts on the new Congress and Administration in Washington, and their view is somewhat mixed. Overall, four in ten (42-percent) say they expect the policies of the new administration and Congress, in general, to have a positive impact on their business this year. One third (32-percent) say it’s too early to predict and 17-percent say it will have no impact. Only 9-percent anticipate a negative effect.
Faucher tells us “Business owners are hopeful about the pro-business stance they are seeing from Washington, and are eager to see what regulation and policy changes may be ahead.” However, he notes, “They seem to be taking a wait-and-see attitude, as it takes time for these kinds of changes to generate longer-term impacts.”
In fact, only 44-percent of business owners surveyed say they would anticipate a bump in profits if regulations were eased or eliminated. When it comes to hiring, one-third (32-percent) say reductions in regulations would have a positive impact.
When asked specifically about potential policy reform, survey respondents cited corporate tax reform as the single most anticipated change, viewed favorably by nearly 7 in 10 business leaders.
However, business owners are more event divided when it comes to the impact of potential trade restrictions or tariffs with 33-percent in support, 32-percent in opposition and 31-percent still unsure.
The PNC Economic Outlook survey was conducted from February 9th to March 31st, 2017, by telephone within the United States among 1,843 owners or senior decision-makers of small and mid-sized businesses with annual revenues of $100,000 to $250-million.
