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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 in stocks and Wall Street. But what does this mean for the backbone of America, our small businesses?
new CNBC|SurveyMonkey study Introduced before the Fed announced its first interest rate cut, which was expected — though the exact size of the cut was not — it offers a glimpse into the minds of these businessmen. The quarterly snapshot of Main Street business reveals a mixed mix of cautious optimism coupled with lingering concerns about inflation and rising costs. As the divisive presidential election approaches, the uncertainty is clear.
Four in ten (38%) agreed that inflation remains the biggest risk to their business. This is almost Three times Higher than the next highest risks, consumer demand (13%) and interest rates (10%).
However, cuts in interest rates are also expected It sparked a wave of confidence. A third of respondents (33%) believe that inflation has peaked, and that overall optimism about easing inflation is the highest since the first quarter of this year.
Three in five (62%) small business owners expect some degree of business impact from recent interest rate cuts, with 22% expecting a major impact, and 41% a minor impact. These cuts are fueling action among small business owners: 40% plan to increase investments, 37% plan to expand their business, and 26% said they will stock up on inventory. Only one in five plan to increase employee pay or benefits (20%) or hire more employees (17%).
Thanks to the recent decision by the Federal Reserve, there is clear hope for stability as the economy appears poised to take a big step in the positive direction. For borrowers keen to take advantage of cheaper borrowing costs, the move could provide the boost they’ve been waiting for.
Heading into November, business leaders on both sides of the political spectrum vote largely along party lines, with Democrats and Republicans sticking with their partisan choices.
However, an interesting gap emerged in the survey. Republican small business owners preferred Joe Biden over Kamala Harris. Half of Republican small business owners (53%) preferred Biden over Harris as the Democratic nominee, which may show a divide in how different candidates’ economic policies resonate with Main Street — or perhaps an expectation that it will be easier for Trump to defeat Biden in the presidential election. election.
Meanwhile, Democratic business owners are overwhelmingly behind Harris. Nine out of ten (90%) of these owners support Harris as the Democratic nominee, revealing the stark political polarization that exists in this community.
Our study revealed a notable lack of enthusiasm among vice presidential candidates Tim Walz and J.D. Vance on both sides of the political aisle.
Nearly four-in-ten (37%) small business owners believe Vance will have a positive impact on their business, 13 points lower than Donald Trump (50%) but still higher than Democratic vice presidential nominee Walz (29 %). Although both candidates had majority support among small business owners of their parties (68% for Vance among Republican small business owners, 67% for Waltz among Democratic small business owners), the presidential candidates had stronger support within their parties (89% for Waltz ). Trump and 79% for Harris).
The CNBC|SurveyMonkey study confirms that companies are cautiously optimistic as they continue to weather the headwinds of this uncertain landscape. As interest rate cuts spark optimism and business owners plan to reinvest their businesses in various ways, it will be essential to continue to monitor and analyze this group as election season heats up.
— Written by Eric Johnson, CEO of SurveyMonkey
