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Last week, the Federal Reserve cut interest rates for the first time in more than four years, signaling a potential rally for stocks and Wall Street. But what does that mean for the small businesses that are the backbone of America?
A new CNBC|SurveyMonkey survey, surveyed just before the Fed announced its first rate cut, offers a glimpse inside the minds of these entrepreneurs, even though the exact size of the cut was not anticipated. A quarterly snapshot of Main Street businesses revealed a mix of cautious optimism along with persistent concerns about inflation and rising costs. A polarizing presidential election is just around the corner, and the uncertainty is clear.
Four in 10 (38%) agreed that inflation remains the biggest risk to their business. This is almost 3 times higher than the next highest risks, consumer demand (13%) and interest rates (10%).
Nevertheless, expected rate cuts also triggered a surge in confidence. A third (33%) of respondents believe inflation has peaked, and overall optimism for easing inflation is at its highest since the first quarter of this year.
Three in five (62%) small business owners expect the recent interest rate cuts to have some impact on their business, with 22% expecting a major impact and 41% expecting a minor impact. There is. These cuts are prompting action from small business owners, with 40% saying they intend to increase investment, 37% planning to expand and 26% saying they will stock up on inventory. Only one in five plan to increase employee pay or benefits (20%) or increase employee employment (17%).
Expectations for stability are clearly rising as the economy looks poised to take a big step in a positive direction, kickstarted by the Fed’s recent decisions. For borrowers looking to take advantage of lower borrowing costs, the move could be a much-needed boost.
Ahead of November, business leaders on both sides of the political spectrum are voting primarily along party lines, with Democrats and Republicans sticking to their party choices.
However, the survey revealed one interesting disagreement. Republican small business owners favored Joe Biden over Kamala Harris. Half of Republican small business owners (53%) support Biden over Harris as the Democratic nominee, potentially reflecting how different candidates’ economic policies resonate with Main Street. This may indicate that there is a difference in opinion as to whether to do so, or that there is an expectation that Mr. Biden will be easier for President Trump to defeat. election.
Democratic business leaders, on the other hand, overwhelmingly support Harris. Nine out of ten (90%) of these owners support Harris as the Democratic candidate, highlighting the political polarization that exists in this community.
Our research reveals a notable lack of enthusiasm for vice presidential candidates Tim Walz and J.D. Vance on both sides of the political aisle.
Nearly four in 10 small business owners (37%) believe Vance will have a positive impact on their business, 13 points lower than Donald Trump (50%), but still. That’s higher than Democratic vice presidential candidate Walz (29%). Although both candidates received a majority of support from small business owners in their respective parties (Vance with 68% of Republican small business owners and Walz with 67% of Democratic small business owners), each presidential candidate It had stronger support within the party (89% among Democrats). (79% for Trump and Harris).
CNBC|SurveyMonkey research supports cautious optimism as companies continue to navigate the crosswinds of this uncertain environment. Interest rate cuts have fueled optimism and owners are planning to reinvest in their businesses in a variety of ways, but continued monitoring and analysis of this group will be essential as the election season heats up. .
— Eric Johnson, SurveyMonkey CEO
