Economic confidence among U.S. small business owners jumped 21 percentage points over the last six months, reaching the highest level recorded in five years, according to the spring 2017 Bank of America Small Business Owner Report released today. The survey of 1,000 small business owners across the country shows that more than half of respondents are confident the national economy will improve over the next 12 months, and they are equally optimistic about their local economies.
A similar survey from Capital One confirms the significant increase in economic confidence. The Small Business Growth Index released earlier this month found that half of small business owners feel current business conditions are good or excellent, and the same percentage expect to see conditions improve in the next six months.
Women and millennial business owners are driving optimism, according to the Capital One survey; both groups are more optimistic about current and future economic conditions than other respondents. Seventy-three percent of millennials expect to be in a better financial position in six months from now, compared to 53 percent of Gen X and 49 percent of Baby Boomers.
Despite the jump in optimism, business owners are taking a wait-and-see approach to hiring and expansion. The Bank of America study found that five-year growth plans and revenue expectations remained stagnant over the last six months, while hiring plans dropped to their lowest point in five years. Of small business owners surveyed, only 18 percent plan to hire in the next year, down from 25 percent last fall.
“What our survey shows is a significant shift in the mindset of small business owners from just six months ago,” said Sharon Miller, head of small business at Bank of America. “Although some uncertainty remains with respect to hiring and revenue, the increase in general optimism is certainly a promising indicator of potential growth for small businesses in 2017.”
The survey also found that small business owners are less concerned about the strength of the U.S. dollar and the stock market than in the past, however, health care costs remain a significant worry. Forty-two percent of the small business owners surveyed by Bank of America reported concern over the burden of health care costs on their employees, and half of them said their health care costs have worsened in the last five years.