- The CNBC|SurveyMonkey Q4 2024 small business survey reveals a rise in optimism covering issues ranging from taxes to regulation, immigration and even trade policy.
- A huge jump in optimism among Republican business owners is boosting positive sentiment, while among Democrats who own their own businesses, the outlook has dimmed.
- When it comes to inflation, there are fewer partisan divisions and more businesspeople believe a peak has been reached, although notably this view remains short of the majority on Main Street.
Academics and political strategists have long observed a tendency among voters to seek changes in leadership during periods of economic hardship, a phenomenon rooted in the belief that new leadership can offer solutions to pressing economic challenges. Our recent quarterly surveys highlighted small business owners’ concerns about inflation and other difficulties faced under the Biden administration.
Post-election, optimism is rising in the small business community.
In the CNBC|SurveyMonkey Small Business Survey for the fourth quarter of 2024, the small business confidence index rose to 62 out of 100, an increase of 11 points from 51 in the third quarter of 2024 and 16 points above the fourth quarter of the year past (in 46).
The optimism of Republican businesspeople is driving the increase in positive sentiment. Notably, small business owners who identify as Democrats report a decline in business sentiment, from 62 in the previous quarter to 50 in the fourth quarter. However, this decline is not enough to offset the huge jump in sentiment among Republican businesspeople – 28 points quarterly. Independents registered a small jump, from 51 points in the third quarter to 57 points in the fourth quarter.
The online survey was conducted Nov. 11-11. 18 among a sample of more than 2,700 small business owners.
Trump Tariffs and Partisan Sentiment
While small business sentiment has increased, owners are expressing concerns about the unknown when it comes to increased trade restrictions and the possibility of higher costs for imported goods and materials under an upcoming new presidency.
When it comes to tariffs, the concern is split almost 50/50. More than half (54%) of small businesses overall are “not at all concerned” or “not very concerned,” while 46% are “very or somewhat concerned.”
When analyzing the data based on political affiliation, 76% of Republican business owners show little or no concern about the proposed tariffs, compared to 22% of Democrats. On the other hand, 78% of Democratic business owners are “very or somewhat concerned,” compared to just 24% of Republican business owners.
Tariff issues are further divided along party lines. Four-in-ten (42%) small business owners expect President-elect Trump’s proposed tariffs to have an impact on their business, compared to 33% who do not foresee any impact. Republican business owners are more likely than Democratic business owners to think tariffs won’t affect them (48% vs. 16%). Two in three (64%) Democrats think tariffs will affect their businesses, compared to just 31% of Republicans.
Interestingly, only one in four (23%) small business owners are taking preventive action ahead of the proposed tariffs, with more than half not expecting to take any action (56%) and one in five unsure (20%).
Agreement on an inflation spike
The survey’s findings reflect an encouraging sentiment towards inflation and a less partisan outlook. Forty percent of small business owners feel inflation has peaked, up from 33% the previous quarter – and including 45% of Republican respondents and 40% of Democratic respondents. While inflation continues to be the top concern for small business owners, only 28% cite inflation as their biggest risk, down from 38% in the previous quarter.
Confidence in the Federal Reserve’s ability to control inflation reached a new high in this quarter’s report, but the Fed remains an issue where the partisan divide is significant. Nearly half (45%) of small business owners are “very or somewhat confident” in the Fed’s ability to control inflation, an increase of 11 percentage points from the previous quarter (34%). But 68% of Democratic Party respondents are included in this average, compared to 31% of Republican respondents.
With the findings of the latest CNBC|SurveyMonkey study reflecting an increase in confidence and optimism, the question becomes whether this trend will last in the long term. It remains to be seen how the new economic policy will actually impact these entrepreneurs and their businesses as a new administration takes shape.
–By Eric Johnson, CEO of SurveyMonkey
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