Small business sales expectations plummet to a 46-year low — but owners are already banking on an economic rebound
- The National Federation of Independent Business's survey released Tuesday showed that small business optimism slumped to 90.9 in April. The median economist estimate was for a drop to 83.
- The survey's index of sales expectations posted the sharpest drop from March, slumping 30 points to negative 42, the lowest reading in 46 years.
- On the flip side, small business owners' expectations of the US economy jumped 24 points in April, erasing all losses from March.
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US small businesses expect that their sales will continue to suffer from sweeping lockdowns to combat the coronavirus pandemic, but think the economy will pick up in the next six months as some states begin to reopen.
Small business optimism slumped 5.5 points to 90.9 in April, according to the National Federation of Independent Business's survey released Tuesday, exceeding the median economist estimate of a sharper drop to 83, according to Bloomberg data. In March, the measure of optimism fell by the most ever, ending a record run.
"The impact from this pandemic, including government stay-at-home orders and mandated non-essential business closures, has had a devastating impact on the small business economy," said William Dunkelberg, NFIB's chief economist, in a statement.
Owners expect that their sales will continue to slump, but expect that the US economy will rebound in the next six months, according to the survey.
The survey's index of sales expectations posted the sharpest drop from March, slumping 30 points to negative 42, the lowest reading in 46 years. On the flip side, small business owners' expectations of the US economy jumped 24 points in April, erasing all losses from March.
"Owners' optimism about future conditions indicates they expect the recession to be short-lived," the NFIB said. A net 29% of small-business owners surveyed indicated they think the economy will be better in six months, the most since October 2018.
"Presumably this divergence captures the idea that the overall economy can't get much worse, so the future has to be better than the past, but business owners remain very depressed about their own position," wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a Tuesday note.
In addition, the survey showed that small business hiring plans fell to an eight-year low, and plans to expand fell to the lowest in over a decade.