Despite an economy that’s far from recovered, soaring gas prices, and the import-price index creeping upward, small businesses are showing a surprising amount of confidence as it pertains to capital spending, hiring, and obtaining credit.
In the recent Wells Fargo/Gallup Small Business Index, small business owners said they plan to increase capital spending by 28 percent, a notable four-year high. What’s more, small business owners have already increased capital spending by 24 percent in the past 12 months, the highest level seen since April 2008.
But the upward trends don’t stop there: small business owners are feeling more confident about hiring as well. Over the next year, a 22 percent increase in small business job creation is expected to occur, showing an optimistic outlook not seen in the past four years. It should be noted, however, that making good on such auspicious declarations of hiring hasn’t panned out: More small business owners reported decreasing jobs (22 percent) than adding them (13 percent).
Economic uncertainty, along with health care costs, seem to be the driving forces behind small business owners reticent to bring on new hires–the latter of which actually has feasible solution. In his 2013 budget, President Barack Obama outlined an expansion and simplification plan for the Small Business Health Care Tax Credit in the Affordable Care Act that would benefit close to 500,000 employers who provide insurance to four million workers–that is, if Congress approves the proposal.
Although it would provide an additional $14 billion in tax credits over the next 10 years, Obama’s proposal has predictably been met with opposition by some Republicans who believe such an expansion isn’t the answer. However, given the alluring details of the proposal, it just might be what small business owners need to regain confidence in hiring.
In addition to a slowdown of adding jobs, a discrepancy between 2012 predictions and 2011 results was also found where the topic of obtaining credit is concerned. Twenty-seven percent of small business owners polled said getting credit this year would be somewhat or very easy (up 22 percent from last year), while 33 percent admitted it was somewhat or very difficult to actually obtain credit over the past 12 months–a familiar sentiment during the last two quarters of 2011.
Aside from the actual results of hiring and available credit this past year–and whether or not 2012’s capital spending and job creation expectations come to fruition–it should be somewhat heartening to see such optimism from small business owners who would undoubtedly bear the mightiest blow should the precarious economic climate slip further in the red.