According to the 2016 Middle Market Business Outlook Survey, many business owners are not optimistic about the national economy, or their ability to push through difficult times. Is this lack of faith justified or are mid-size business owners being overly cautious?
The Survey Shows a General Lack of Faith
The survey found that small and medium-sized companies are still very concerned about the strength of the economy, despite promises of tax cuts and banks being more willing to lend. Only 39 percent of businesses are optimistic about the national economy, and just 10 percent have high hopes for the global economy. This lack of faith is distressing for politicians and policy makers who are striving to make things better for the commerce world.
Furthermore, the same survey found that 42 percent of respondents believe that the economy is headed for decline in 2016, with only 24 percent feeling optimistic about the future. In addition, 40 percent said they expected no growth in their revenue streams while less than 30 percent expect slight improvement over the next 12 months.
Things Aren’t Bad
If the opinions of small business owners determined our future, the outlook would be quite grim. But as it stands, things aren’t nearly as bad as they make them out to be. Thanks to government bailouts, reduced taxes, and other factors, these businesses are able to gain more financing for improved growth.
Trends since the beginning of the year have predicted that the market is booming and ripe for growth in most industries. Things aren’t quite as good as they were a decade ago, before the recession hit, but they have improved significantly since 2008.
Is Their Lack of Faith Justified?
If things are okay, then why are businesses putting so little faith in the market? There are many factors that contribute to this general mindset, and the media is one of them.
People thrive on hearsay. This has never been more evident than today, when there are news reports from China available in the United States within seconds of publishing. Even though Americans don’t experience the events on the other side of the world, they certainly read about them.
Furthermore, the media rarely publishes positive news stories. Bad news sells much better than good news. Consumers, and even business owners, often don’t realize that their world view is negatively influenced by the current news cycle.
Interestingly, 70 percent of survey respondents stated that they were optimistic about their local economy. That’s because they’re close to this market, and they know how it’s performing. They’re optimistic about the future of things they can experience firsthand, but since they can’t see what’s happening outside of that sphere, they often become fearful.
Brexit Decision Weighs In
The survey results discussed in this article came before the UK’s Brexit vote – a decision that could negatively impact the world economy to some degree, and that in the near term has frightened business owners.
However, things aren’t expected to be negative for the United States following this decision. In fact, the decision could bring positive benefits. “The Brexit will not mean all that much in the U.S. recovery in the grand scheme of things,” Chuck Fulkerson, an investment expert and market analyst, told Fox Business. “There could be a massive capital flight to safety, which implies a significant inflow of funds into U.S. Treasury securities, which could drive interest rates lower in the U.S. and also boost the value of the dollar.”
Surprisingly, the U.S. economy could start performing even better. Mortgage rates could fall, interest rates could drop, and stocks could become cheaper, all of which could lead consumers to feel more comfortable. Businesses in the United States could see a direct influx in revenues as a result.
Ultimately, the business outlook for 2016 looks positive.