"We Could Be At A Turning Point": Small Business Confidence Is Suddenly Collapsing

Having soared to all-time highs in 2018 cheering Trump's tax cuts, economic confidence among small businesses has hit its lowest level since the 2016 election, according to a new report.

Heading into 2019, small businesses are becoming more cautious about their plans for spending, whether investments or hiring new employees. Some are already reacting to slowing sales, while others are trying to plan ahead and deal with fears of tariffs, volatile financial markets, the government shut down, higher interest rates and other headwinds heading into the new year with some already speculating about a 2020 recession.

According to a monthly survey of 765 small companies by Vistage Worldwide Inc, just 14% expect the economy to improve this year and 36% expect it to get worse. For the first time since the last election, small businesses are more pessimistic about their own financial outlook then they had been in the year prior.

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Richard Curtin, a University of Michigan economist stated: "We could be at a turning point. Recessions are not made of one firm collapsing, but of many firms cutting back in marginal ways." And yet, all this flies in the face January's jobs report which saw payrolls rise by 304,000, indicating that jobs still appear to be growing at a healthy clip.

Meanwhile, according to the Vistage Survey, 42% of the surveyed firms said that the Trump administration helped their businesses, down from a high of 52% in January of last year. 34% claimed that the Trump administration had no impact. About one in four small businesses said that the Trump administration had hurt the outlook for their business going forward.

Confirming the shift in sentiment, Bill Visintainer, chief executive of Atlas Welding Supply told the WSJ that "people were inquiring a lot, but they didn’t pull the trigger, not nearly at the rate we saw a year earlier.” Visintainer also says that customers have been taking longer to pay their bills. As a response, he has cut back on the company's spending and delayed purchases of products he needs to deliver gas until customers place orders, instead of steadily keeping inventory in place.

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