America's Small Business Owners Optimistic About the Economy

Small business owners are reporting feeling better about the U.S. economy as inflation and recession fears subside, according to a new survey by PNC Financial Services Group. Economic optimism among small and midsize employers is at a 22-year high, PNC found.

Over half of respondents – 55% – said they are "highly optimistic" about the national economy this year, up from 34% last fall and 26% a year ago, according to the Pittsburgh-based bank. Eight in 10 owners surveyed expressed confidence about their own businesses' financial prospects. Over the next two quarters, just over half of the business owners who were surveyed think their profits will rise, while only 5% expect earnings to fall.

"The U.S. economy is doing quite well. We had strong economic growth in the second half of 2023, with consumers spending more and businesses investing. That strength is persisting into 2024," PNC Chief Economist Gus Faucher told CBS MoneyWatch.

The findings are based on a randomized phone survey of 500 small and midsize businesses, which PNC defines as having annual revenue ranging from $100,000 to $250 million, from January 2 to February 1, 2024.

Small businesses are critical to the United States, and it's no surprise why. Nearly 62 million Americans, or 46% of workers are employed by small businesses.  Overall, the U.S. has more than 33 million small businesses, which generated 17.3 million new jobs between 1995 and 2021.

"The labor market is strong, there is good wage growth and job gains, so consumers can increase spending," Faucher said.

The National Association for Business Economics earlier this week predicted that GDP will rise 2.2% in 2024; the group expects the Consumer Price Index, a key inflation gauge, to decline to an annual rate of 2.4% this year, compared with 4.1% in 2023 and 8% in 2022.

Small businesses continue to face a range of challenges, like access to bank loans and finding qualified workers. Roughly 28% of firms PNC surveyed said they struggle to attract job applicants, while many smaller employers say job candidates lack the proper experience or skills.