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Small business owners are feeling good right now. According to the latest Vistage Small Business CEO Confidence report, 79% of U.S. small business CEOs expect increased revenues next year, up from 61% at the start of 2024. The study credits this jump in optimism to a number of factors, the November election results being the most important.
Historically speaking, this latest jump in small business CEO confidence is pretty significant. The 36% year-over-year increase in the confidence index, currently at 109.5, is the largest since the report started back in June 2012. Optimism about the future of the U.S. economy improved by 130% year-over-year, also the largest gain in the survey’s history. The 79% of respondents who expect increased revenue over the next year is the highest number since August 2021, respectively.
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The climb in confidence started in September when the Federal Reserve cut interest rates 1.5 points. The additional quarter point rate cut in November most likely helped confidence as well. The uptick in consumer prices in October and the decrease in jobs added did little to cool the good mood, it seems.
The report points to the November election as the biggest driver behind rising confidence. The coming administration has boosted confidence because of its expected stances on taxes and tariffs, according to the report’s authors. Here’s how they sum it up:
“Tax policies directly affect profitability, planning, and investment decisions. Among the concerns voiced were high corporate taxes, estate taxes, capital gains taxes, and uncertainties with the potential sunset of the 2017 Tax Cuts and Jobs Act (TCJA). Small businesses are hoping for lower taxes for reinvestment, employee benefits and business growth.”
“Tariffs influence pricing, margins, and global competitiveness.Small businesses’ concerns in this area include tariffs on imports (e.g., China, Mexico, Europe) significantly increasing costs of goods sold (COGS), disruption in supply chains and exacerbating inflation. They are optimistic about targeted, predictable trade policies over broad, indiscriminate tariffs.”
However, the report notes that there is less optimism on the administration’s potential effects on health care. Fifty-nine percent of small businesses say that their health care costs will rise more than 10% in 2025. The report’s authors warn that rising health care costs and the possible repeal of the Affordable Care Act (ACA) would be detrimental to both employee wellbeing and business finances.
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