Key findings:
- Underscoring a cooling labor market, open positions within small businesses reaches new lows
- Small businesses remain cautious about inflation’s threat, despite optimism that hope inflation has peaked
- Three in five (62%) of small business owners expect some degree of impact on the business from anticipated interest rate cuts
- Business owners are less enthusiastic about vice presidential candidates Tim Walz and JD vance compared to their presidential counterparts
- Half of Republican small business owners (53%) prefer Joe Biden over Kamala Harris as the Democrat candidate while Democrats overwhelmingly prefer Kamala
- Small business confidence see steep gains in light of interest rate cuts.
Underscoring a cooling labor market, open positions within small businesses reaches new lows
Only one in five (20%) small business owners report having open positions unfilled for at least three months, down from 24% the previous quarter, and lowest since 16% seen in Q1 of 2020. Two in five (40%) say that it is harder to find qualified hires, down from 47% from Q3 of last year (2023), and on par with previous quarters this year.
Small businesses remain cautious about inflation’s threat, despite optimism that hope inflation has peaked
One in three small business owners (33%) believe that inflation has peaked, up 9 points from last quarter (24%). Two in three (66%) believe that inflation will continue to rise. Optimism for inflation relief is highest since the inception of this question, and highest since the first quarter of the year (29% in Q1 2024). Despite the optimism, small business owners remain cautious about the threat of inflation: four in ten (38%) say that inflation is the biggest risk to their business, unchanged from the previous quarter (37%) and nearly three times higher than the next biggest risks, consumer demand (13%) and interest rates (10%).
Three in five (62%) of small business owners expect some degree of impact on the business from anticipated interest rate cuts
In light of the anticipated interest rate cuts, confidence in the Federal Reserve’s ability to control inflation is slightly up from the previous quarter (34% vs. 31%) and in Q3 of the previous year (30%). Three in five (62%) of small business owners expect some degree of impact on the business from interest rate cuts, with 22% expecting a major impact, and 41% a minor impact. One in three (36%) do not expect any particular impact. With a decline in interest rates, small business owners plan on increasing investments (40%) and expanding their business (37%), followed by increasing inventory (26%). Only one in five plan on increasing employee wages or benefits (20%) or hiring more employees (17%).
Small business owners overall see greater alignment with Donald Trump, but support for candidates is split along party lines
Half of small business owners think Donald Trump will have a positive impact on their business, compared with only 32% who say the same for Kamala Harris. One in five (18%) are undecided (8%) or do not believe either candidate will benefit their business (10%). Support for either candidate mirrors political lean:
- 89% of small business owners who identify as Republican or lean Republican think Donald Trump has a more positive impact on their business, compared with only 3% aligned with Kamala.
- Democrat small business owners still show overwhelming support for Kamala (79%), but see a greater share that think Donald Trump will have a more positive impact (7%) or do not believe in either candidate (10%).
- Independent small business owners are less optimistic that either party will improve their businesses, but slightly prefer Trump over Harris:
- 31% of Independent small business owners think that Trump will benefit their business the most, compared with only 13% who say the same for Harris.
- The majority are either undecided (28%) or do not believe in either candidate (28%).
Business owners are less enthusiastic about vice presidential candidates Tim Walz and JD vance compared to their presidential counterparts
Nearly four in ten (37%) small business owners think that JD Vance will have a positive impact on their business, 13 points lower than Trump (50%), but still higher than the Democratic vice presidential pick Tim Walz (29%). Both candidates see majority support among small business owners from their respective parties (68% for JD Vance among Republican small business owners, and 67% for Tim Walz among Democrat small business owners), but trail the presidential candidates.
Half of Republican small business owners (53%) prefer Joe Biden over Kamala Harris as the Democrat candidate while Democrats overwhelmingly prefer Kamala
Nine in ten (90%) of Democrat small business owners support Kamala as the Democrat candidate, with only 4% preferring Joe Biden and 6% undecided. Only 8% of Republican Small business owners support Kamala Harris as the Democrat candidate: half (53%) prefer Joe Biden, and one in three (33%) are undecided or unsure.
Small business confidence see steep gains in light of interest rate cuts
Small Business Confidence increases to 51 out of 100, up four points from 47 in Q2 of 2024, and 9 points higher than Q3 of last year (at 42).
This increase is mainly driven by positive expectations in multiple areas:
- Changes in government regulation (from 10% positive in Q2 to 18% in Q3)
- Changes in tax policy (from 11% positive in Q2 to 20% in Q3)
- Changes in trade policy (from 10% positive in Q2 to 14% in Q3)
- Changes in technological innovation (from 34% positive in Q2 to 39% in Q3)
A declining percentage of small business owners who predict negative effects from changes in immigration policy sees a decline from 36% in Q2 to 27% in Q3.
Sentiment surrounding current business conditions, expected revenue, and business staff of full-time employees remains unchanged from the previous quarter.
Confidence in President Biden jumps 7 points, with 38% approving (up from 31% in Q2) and 61% disapproving (down from 68% in Q2) of the way Joe Biden is handling his job as president.
Small Business Confidence among Biden’s supporters remains steady, with those who approve of the job Biden is doing as president reporting an overall confidence score of 62, similar to the previous quarter (61). Confidence sees a large increase among those who disapprove of Biden’s performance, increasing 6 points from 39 the previous quarter to 45 currently.
Confidence increases across all political parties:
- Confidence among Democrat business owners increases 3 points quarter over quarter, from 59 to 62.
- Confidence among Republican business owners increases 4 points quarter over quarter, from 39 to 43.
- Confidence among Independent business owners increases 3 points quarter over quarter, from 48 to 51.
