SMBs

Consumer Spending, SMB Optimism On The Decline

Consumer Spending, SMB Optimism on the Decline

Small business owner optimism is slipping, according to a report from the AP, and economists are predicting a slowdown in economic spending in the latter part of the year.

Part of the reason for the potential slowdown is that taxpayers won’t be getting the boost in take-home pay many got last year, as a new tax law went into effect recently. Less money coming in means less spending at businesses that rely on consumers for revenue, like restaurants, retailers and those in the service industry.

The National Federation of Independent Business (NFIB), an advocacy group, did a survey of its members. In addition to the drop in optimism, it also found expectations for lower sales in upcoming months.

The Economic Advisory Committee of the American Bankers Association is predicting that consumer spending in Q4 will fall to a growth rate of 2.2 percent, down from 2.9 percent a year ago. Many retailers rely on that time of year – the holiday shopping season – for a huge chunk in their revenue.

Another business research group, The Conference Board, said its consumer confidence index dropped to 128.1 in December from 136.4 in November – the lowest it’s been since July. Expectations for the economy for the next six months are the lowest since November of 2016.

A report by Harvard University’s Joint Center for Housing Studies also showed troubling signs to come for the economy and consumer spending in general. It issued a report last week that said homeowners will spend less on remodeling and repairs, and that the annual growth rate will be at 5.1 percent by Q4, down from 7.5 percent. Also, according to payroll company ADP, companies hired 20,000 fewer people each month in 2018 than they did in 2018. Some employers said they were struggling to find good candidates, but others expressed trepidation because they didn’t want to risk the expense of expanding a staff.

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