Prolonged Uncertainty Impacting Small Businesses’ Ability to Create Jobs

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U.S. Chamber's Q3 Survey Shows Economic Concerns, Energized Small Businesses Vote.

Prolonged uncertainty about the economy is impacting small businesses’ ability to create jobs, according to the U.S. Chamber of Commerce’s new quarterly small business survey conducted online by Harris Interactive. Only 16% of small business owners reported that they plan to add employees this year, and the majority does not expect to hire in 2013. Small businesses cite the looming fiscal cliff, burdensome regulations, and the health care law as top concerns when considering their business’s future. Leading into the election, the small business community is also energized to effect change, with 92% saying they are very motivated to vote and 97% outlining support for candidates who support free enterprise.

“Continued uncertainty is the greatest threat to small businesses and our country’s economic recovery,” said Thomas J. Donohue, president and CEO of the U.S. Chamber. “We know that’s true from talking to our small businesses, and our survey proves it. Uncertainty forces job creators to sit on the sidelines instead of hiring more employees and expanding their operations. We can help reverse this downward trend by addressing the fiscal cliff, promoting sensible regulations, and providing a clear road map for growth.”

In addition to declining business attitudes as a result of current policy from Washington, inaction is a top concern. More than six-out-of-ten small businesses believe the expiration of the 2001 and 2003 tax rates, coupled with sequestration, will have a significant negative impact on their business’s growth.

“It’s no surprise that given the current economic climate, small businesses are highly motivated to vote in November,” continued Donohue. “These job creators recognize that leadership in Washington directly impacts their ability to thrive, and they will use their voice and their vote to support candidates who will fight for free enterprise policies this November.”

Among the key findings of the Chamber’s Third Quarter Small Business Survey:

Prolonged Uncertainty is Impacting Hiring:

  •     Uncertainty is at its highest level since last year; 49% of small businesses are not sure if their business’s best days are ahead or behind them.
  •     84% say they are pessimistic about their future operations in light of recent unemployment numbers and low workforce participation.
  •     Only 17% of small businesses surveyed expect to add staff in 2013, reflecting a steady downward trend over the course of the year.

Impending “Fiscal Cliff” Adding to Economic Fears:

  •     There was an increase in intensity among those who are concerned about the fiscal cliff. 72% say they are very concerned, which is significantly higher than the 65% reported last quarter.
  •     62% believe that the expiration of 2001 and 2003 tax rates and other business provisions, coupled with sequestration cuts, will have a significant negative impact on their business’s growth, up from 59% in the previous quarter. In total, 89% believe these tax increases will negatively impact their operations.

Leadership in Washington Affects the Small Business Outlook:

  •     76% of small businesses say the health care bill makes it harder to hire more employees.
  •     79% of small businesses surveyed feel that the Administration is not doing enough to keep energy prices low, and 76% say that higher energy prices threaten their business.

Business Community Highly Motivated to Vote in November:

  •     Small business owners are motivated to vote in this election: 97% are motivated and 92% say they are very motivated.
  •     There is still overwhelming support among small businesses for candidates who support free enterprise, with 97% citing it as a factor in how they vote.

The Q3 U.S. Chamber of Commerce Small Business Outlook Survey was conducted online between September 20 and September 27, 2012 by Harris Interactive among 1,391 Small Business Executives (defined as executive level position in a company with fewer than 500 employees and annual revenue less than $25M).

  •     N=578 US Chamber of Commerce Members
  •     N=813 Non-US Chamber of Commerce Members, weighted to be representative of the small business population

Full results from the U.S. Chamber’s Q3 survey can be viewed here:

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