Small business owners in the U.S. have reported the highest levels of trust and satisfaction in Congress since 2020. However, economic concerns overshadow this optimism. The National Write Your Congressman (NWYC) Q2 2024 Index reveals that 67% of respondents fear an economic downturn.
This glaring contrast between rising confidence in lawmakers and deepening anxiety about the economy's trajectory is especially pressing as the 2024 presidential election looms. The outcome of this election could significantly impact the livelihoods of many business owners, further intensifying their concerns.
Randy Ford, president and COO of NWYC, emphasized the gravity of these concerns, noting that despite lawmakers' favourable ratings, small business owners are increasingly worried about the current economic climate. Ford not only encourages NWYC members to continue advocating for their business priorities in Washington but also acknowledges the importance of their efforts. He recognized that as the election approaches, the issues they want candidates to address are shaped by their growing unease about the economy's future.
Here is a summary of the key findings of the survey:
- 67 percent of business owners are concerned about the US economy moving in the wrong direction
- 51 percent said their business remained flat in Q2 of 2024
- 31 percent said their business declined in Q2 of 2024
- 19 percent said their business grew in Q2 of 2024
Top Five Issues For Small Business Owners
As small business owners grapple with economic uncertainty, their priorities for the upcoming presidential election become increasingly vital. Amidst a backdrop of fluctuating trust in Congress and growing fears of an economic downturn, these entrepreneurs are focusing on key issues they want candidates to address. Here, we explore the top five concerns driving their advocacy efforts and shaping their expectations for the future:
1. Immigration
Access to labour: Many small businesses rely on immigrant workers, particularly in sectors like agriculture, hospitality, and construction.
Business costs: Immigration policies can impact labour costs and the overall economic environment.
Harvard Business School Professor William R. Kerr emphasized the significant contribution of immigrants to the US economy in an interview with the Economic Times' Srijana Mitra Das. He noted that approximately 25 percent of the nation's foreign-born inventors and entrepreneurs.
These people are really important for new ideas and running businesses in the US. A lot of them were born in other countries. Studies show that immigrants help start new businesses and create new things. Business leaders should explain how good immigration is for the US economy.
However, there have been adverse incidents involving some immigrants. For example, TikTok influencer Leonel Moreno, who is believed to be from Venezuela, gave bad advice to his followers. He told them to take over empty houses and claim ownership, making it difficult for the real owners to get them out.
2. Inflation
Rising costs: Inflation erodes profit margins and makes it difficult to plan for the future.
Consumer spending: High inflation can reduce spending, impacting small business revenue.
According to the US Chamber of Commerce, inflation is still the biggest problem for small businesses. In fact, it has been a problem for the past eight quarters. More than half (55 percent) of small businesses, especially those in services and manufacturing, say inflation is their biggest problem.
The second biggest problem is growing their sales, followed by higher interest rates and the cost of employee benefits.
3. Taxes
Tax burden: Excessive taxes can hinder business growth and investment.
Tax complexity: Complicated tax codes can be time-consuming and costly for small businesses.
According to Inc. Magazine, small business owners may face a tough tax year in 2024. The outlet warns of potential changes that could hit businesses in five areas:
- Higher taxes for self-employed people
- Lower deductions for business income
- New rules for deducting equipment costs
- Changes in health insurance tax breaks
- Limits on retirement savings
These changes could force small business owners to rethink their financial plans and taxes. This information comes from recent tax law updates and expert predictions.
4. Debt Ceiling And Government Spending
Economic uncertainty: Concerns about government spending and the debt ceiling can create financial instability, affecting small business confidence.
Government programs: Government spending can impact small businesses through tax implications, regulations, and resource competition.
The White House Council of Economic Advisers' report on debt ceiling scenarios highlights the critical economic impacts of failing to raise the debt ceiling. If the US government fails to meet its obligations after reaching its debt limit, it could result in severe disruptions to financial markets, increase borrowing costs, and undermine economic stability.
A blog post on the White House's official website warns that defaulting on debt could lead to a downgrade of the US credit rating, significantly increasing interest rates and strain federal budgets. Additionally, prolonged uncertainty or default could erode investor confidence and slow economic growth.
According to new Goldman Sachs data, 96 percent of small business owners expressed deep concern about the nation's debt and federal government spending. This overwhelming sentiment underscores the significant impact these fiscal issues are having on the backbone of the American economy.
"Small businesses shouldn't suffer the consequences of Washington dysfunction," said Gloria Larkin, President and CEO of TargetGov and an alumna of the Goldman Sachs 10,000 Small Businesses program.
"A government shutdown would slow the economy, undercut consumer demand, and disrupt access to government resources small businesses depend on. Congress must come together to find a solution that addresses government spending disagreements and keeps the government running," Larkin added.
5. Regulations
Compliance costs: Excessive regulations can increase operational costs and administrative burdens.
Red tape: Complex regulations can stifle innovation and hinder business growth.
Gallup's findings clearly show the challenges small business owners face. Regulatory compliance emerges as the most pressing issue, with 22 percent of owners citing it as their top concern. Economic uncertainties follow, reflected in worries about consumer confidence and demand.
The Wells Fargo/Gallup Small Business Index poll provides a comprehensive overview of the primary hurdles faced by small business owners.
- Complying with government regulations: 22 percent
- Consumer confidence in the economy: 15 percent
- Lack of consumer demand: 12 percent
- Lack of credit: 10 percent
- Poor leadership by government and the president: 9 percent
Small business owners face various challenges, from navigating a tangled web of regulations to weathering economic storms. Addressing these issues requires a multifaceted approach involving government and private sector initiatives.
