For the first time since the 2016 election, small firms were more pessimistic about their own financial prospects than they were a year earlier, including plans for hiring and investment, according to a survey conducted by Vistage Worldwide Inc. for The Wall Street Journal.
The survey, which was completed shortly before the 35-day federal shutdown ended, showed that snapshots of various businesses saying they are holding back after a banner year in 2018.
For example, an Alabama welding supply company is delaying purchases of new gas cylinders. A men’s clothing store in Louisiana has trimmed fall orders for suits and high-end sportswear. An information technology consulting firm in California is holding back on planned hiring.
Many small businesses were cautious about investment and hiring plans, according to The Wall Street Journal (link is behind a paid firewall).
Some were responding to early signs of slowing sales and others worry that tariffs, unstable financial markets and the ripple effects of the government shutdown will thwart growth this year.
Economic confidence among small firms, which edged downward for much of 2018, in January reached its lowest level since President Trump’s election, according to the monthly survey that polled 765 small firms. (Vistage polls firms with between $1 million and $20 million of revenue.)
Only 14 percent of firms expect the economy to improve this year, while 36 percent expect it to get worse.
“We could be at a turning point,” Richard Curtin, a University of Michigan economist who analyzed the data, told the newspaper. “Recessions are not made of one firm collapsing, but of many firms cutting back in marginal ways.”
Forty-two percent of those surveyed said the Trump administration had improved prospects for their business, down from a high of 52 percent in January 2018, and 34 percent said it had no impact.
Nearly one in four small firms surveyed by Vistage said the Trump administration had hurt the outlook for their business.
At Atlas Welding Supply Co. Inc. in Tuscaloosa, Ala., sales in 2018 grew at a 30 percent clip before flattening out in November and December.
“People were inquiring a lot, but they didn’t pull the trigger, not nearly at the rate we saw a year earlier,” said chief executive Bill Visintainer, echoing many dealers in surveys conducted by Baird, the Marine Retailers Association of the Americas, and Trade Only Today.
One dealer respondent to the most recent survey said one customer that “went cold” told the dealer he could have bought two of the boats he was considering with what he’d lost in the stock market plunge.
One retailer that responded to the WSJ survey echoed the sentiment of marine dealers as well.
Despite strong sales last year, New Orleans clothing store Rubensteins was cutting back orders for the coming year.
“I’d rather play it safe at this point,” said Kenny Rubenstein, who has about 20 employees. “I’m divided right down the middle. Half of me is very positive. Half of me is very nervous.”