Despite Government Shutdown, U.S. Businesses Remain Optimistic About Economy
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Last Updated: 03/13/2019

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In less than six months, the optimism of business owners is down — albeit still positive — across all categories, according to the Paychex Business Sentiment Report for Spring 2019.
While several factors could have affected the change, it should be noted that this survey was conducted from Feb. 15-26, 2019, following a 35-day government shutdown (Dec. 22, 2018 to Jan. 25, 2019) and post-State of the Union address (Feb. 5).
On a scale of 1-100, with 1 representing the highest level of pessimism and 100 representing the peak of optimism, business owners’ overall business outlook is down six points since October, falling to 65/100 — the same number reported in July 2018. Business owners’ confidence in the U.S. economy is down three points — 62/100 — since the last report, but remains two points above July’s results.

“Though optimism in a variety of areas is down from our last Business Sentiment Report, these results still reflect a positive outlook among business owners,” said Martin Mucci, Paychex president and CEO. “The decline seen in these latest results are primarily around hiring and the ability to raise wages.
“This is the lowest level of confidence in employers’ ability to fill openings with qualified workers that we’ve seen since starting the Business Sentiment Report in July of last year,” Mucci added. “While jobs growth remains steady, business owners are still having a hard time finding candidates with the right skillsets to meet their needs in today’s tight labor market.”
Here’s a quick snapshot from the past three surveys reflecting some of the changes in outlook.
Subjects | Summer 2018 | Fall 2018 | Spring 2019 | |
---|---|---|---|---|
MOST OPTIMISTIC | ||||
Overall Business Outlook | 65/100 | 71/100 | 65/100 | |
|
62/100 | 65/100 | 64/100 | |
U.S. Economy Overall | 60/100 | 65/100 | 72/100 | |
Ability to Find New Customers |
69/100 | 68/100 | 62/100 | |
MOST PESSIMISTIC | ||||
Ability to Make Capital Investments | 59/100 | 62/100 | 53/100 | |
Overall Regulatory Environment | 50/100 | 53/100 | 50/100 | |
Ability to Fill Open Positions w/ Qualified Candidates |
50/100 | 51/100 | 43/100 | |
Ability to Raise Wages | 48/100 | 51/100 | 41/100 |
The larger the business, the better the outlook*
Even though there were dips in every major category — from the state of the economy to the overall business outlook — among the three business sizes surveyed, the larger the employer the more optimism they expressed.
Although optimism dropped several points in most categories from the Fall 2018 report for the three business sizes surveyed, the most notable change was the 21-point plunge by the 1-19 employee group on how they feel about the regulatory environment — down to 50/100 — while the larger business groups experienced a slight change or no change at all (the 20-99 employee group was at 67 for both reports).
Subjects | 1 - 19 employees | 20 - 99 employees | 100 - 500 employees |
---|---|---|---|
U.S. economy | 62/100 | 71/100 | 75/100 |
Overall business outlook | 65/100 | 71/100 | 80/100 |
Regulatory environment | 50/100 | 67/100 | 77/100 |
Ability to Raise Wages | 39/100 | 74/100 | 82/100 |
Ability to Fill Open Positions w/ Qualified Candidates |
42/100 | 74/100 | 80/100 |
*-Using the U.S. Census, all data in this report is weighted by business size by employee count to accurately represent the small business landscape in the U.S. Weighting results based on this criterion means the data by business size represents raw responses.
Recession-proof? It depends
Similarly to their outlook on the economy, the smaller the business the less confidence they expressed in their company’s ability to rebound from an economic recession. More than one-third of small businesses (1-19 employees) said they were not confident.
1 – 19 employees | 20 – 99 employees | 100 – 500 employees | ||
---|---|---|---|---|
Not Confident | 34% | 15% | 9% | |
|
47% | 49% | 37% | |
Very Confident | 19% | 37% | 54% |
Big businesses like tax reform
In less than five months — and with the effects of the Tax Cuts and Jobs Act factored in — the difference in the perceived positive impact of tax reform on large and small businesses grew 18 percent, favoring large businesses, with the difference between the two at 57 percent.
Tax reform | 1 - 19 employees | 20 - 99 employees | 100 - 500 employees |
---|---|---|---|
Strong Positive Impact | 6% | 25% | 43% |
Some Positive Impact | 20% | 28% | 40% |
No Impact | 47% | 24% | 12% |
Some Negative Impact | 20% | 17% | 3% |
Strong Negative Impact | 7% | 5% | 2% |
More differences based on legislation
Larger businesses felt a more positive impact of wage legislation (e.g., minimum wage laws, overtime rules, pay equity) — up six points to 78 percent — from the previous report. Smaller businesses expressed less of a positive impact, with the 1-19 employee group dipping nine percentage points and into single digits, while the 20-99 employee group saw a six-point dip.
The groups also differed greatly on the positive impact of immigration reform and foreign trade and tariffs, with the 100-500 employee group expressing a 74 percent positive impact about the latter while the 1-19 employee group was at 11 percent.
Wage Legislation | 1 - 19 employees | 20 - 99 employees | 100 - 500 employees |
---|---|---|---|
Strong Positive Impact | 4% | 22% | 39% |
Some Positive Impact | 5% | 25% | 39% |
No Impact | 72% | 37% | 18% |
Some Negative Impact | 13% | 11% | 3% |
Strong Negative Impact | 7% | 5% | 1% |
Immigration Reform | 1 - 19 employees | 20 - 99 employees | 100 - 500 employees |
---|---|---|---|
Strong Positive Impact | 6% | 25% | 34% |
Some Positive Impact | 6% | 20% | 44% |
No Impact | 80% | 43% | 17% |
Some Negative Impact | 2% | 10% | 3% |
Strong Negative Impact | 6% | 3% | 2% |
Foreign Trade and Trade Tariffs | 1 - 19 employees | 20 - 99 employees | 100 - 500 employees |
---|---|---|---|
Strong Positive Impact | 3% | 19% | 34% |
Some Positive Impact | 8% | 21% | 40% |
No Impact | 67% | 41% | 17% |
Some Negative Impact | 14% | 15% | 7% |
Strong Negative Impact | 8% | 5% | 2% |
The HR challenge
Even though the small business group’s (1-19 employees) outlook on the regulatory environment experienced a notable dip from previous reports (second chart from top), leaving them right in the middle of optimistic and pessimistic (50 percent), this same group expressed that their workforce size made managing HR less challenging. Conversely, among larger businesses (100-500 employees), nearly 90 percent find managing HR to be at least somewhat challenging.
Managing HR | 1 – 19 employees | 20 – 99 employees | 100 – 500 employees | |
---|---|---|---|---|
Not Challenging | 62% | 27% | 11% | |
|
28% | 50% | 49% | |
Very Challenging | 10% | 23% | 40% |
Most interesting, perhaps, was that nearly 2-in-5 employers (39 percent) with 100-500 employees feel that managing employee conflicts and harassment in the workplace is very challenging. That decreases dramatically to 22 percent in organizations with 20-99 employees and 7 percent for those with 1-19 employees.
Location, location, location
Without much change in its response from the previous report in October, the Midwest saw its nearly status quo optimism on the U.S. economy overall (64/100) and its positive business outlook overall (70/100) land it as the top geographic area in each category. Those numbers almost mirrored the last report, with the only change a 1-point dip in overall business outlook. The region inched up from third.
However, there was a significant shift in relation to other areas from report to report, with the South dropping to second in economic outlook and the West falling from first to fourth in overall business outlook with a 21-point plummet.
Subjects | West | Midwest | South | Northeast |
---|---|---|---|---|
U.S. economy | 50/100 | 64/100 | 62/100 | 52/100 |
Overall business outlook | 56/100 | 70/100 | 68/100 | 59/100 |
Regulatory Environment | 52/100 | 53/100 | 52/100 | 46/100 |
Ability to Raise Wages | 50/100 | 32/100 | 41/100 | 43/100 |
Ability to Fill Open Positions w/ Qualified Candidates |
43/100 | 53/100 | 46/100 | 30/100 |
Also of interest, especially in today’s competitive labor market, was that half of the respondents (48 percent) from the West find offering competitive benefits to be a challenge, while only 30 percent of business owners in the Northeast feel confident in their ability to hire capable talent.
People, places, and wage disparity
Despite having similar positive outlooks on the U.S. economy, the overall business outlook, and even the regulatory environment, when it comes to business owners’ confidence in the ability to raise wages, the disparity between low population density (rural – 15/100) and high population density (urban – 49/100) is noteworthy.
Rural | Suburban | Urban | |
---|---|---|---|
U.S. Economy | 63/100 | 62/100 | 55/100 |
Overall Business Outlook | 68/100 | 67/100 | 57/100 |
Regulatory Environment | 49/100 | 50/100 | 52/100 |
Ability to Raise Wages | 15/100 | 50/100 | 49/100 |
Ability to Fill Open Positions w/ Qualified Candidates |
30/100 | 43/100 | 49/100 |
Manufacturing loses a little steam
Despite a four-point dip, U.S. manufacturing remained the most optimistic industry about the U.S. economy — and by 10 points (72/100), the third straight Sentiment Report it has led all other industries in this category.
Most industries were within a few points of one another in most categories and had confidence level highs of 45 points (retail/wholesale — ability to fill open positions with qualified candidates) and 65 percent (manufacturing, other — overall business outlook).
However, the starkest discovery was the 19/100 posted by the retail/wholesale sector’s confidence in its ability to raise wages, more than 20 points lower than “other” and 35 points fewer than manufacturing.
Professional Services |
Retail/ Wholesale |
Manufacturing | Other | |
---|---|---|---|---|
U.S. economy | 62/100 | 62/100 | 72/100 | 51/100 |
Overall business outlook | 61/100 | 64/100 | 65/100 | 65/100 |
Regulatory Environment | 49/100 | 52/100 | 51/100 | 50/100 |
Ability to Raise Wages | 50/100 | 19/100 | 54/100 | 40/100 |
Ability to Fill Open Positions w/ Qualified Candidates |
43/100 | 45/100 | 42/100 | 27/100 |
Age isn’t just a number, it’s an attitude
Owner age seems to have an impact on how positive one is in hiring and raising wages, as younger owners (18-34) demonstrate in the report as compared to older owners (50-plus). Also notable is the 63 percent positive outlook that the youngest group (18-34) has about the regulatory environment.
18 - 34 | 35-49 | 50+ | |
---|---|---|---|
U.S. economy | 60/100 | 57/100 | 62/100 |
Overall business outlook | 81/100 | 62/100 | 65/100 |
Regulatory Environment | 63/100 | 57/100 | 50/100 |
Ability to Raise Wages | 43/100 | 53/100 | 35/100 |
Ability to Fill Open Positions w/ Qualified Candidates |
52/100 | 51/100 | 32/100 |
Establishing one’s self makes a difference
The data seems to support that the more you do something, the more comfortable it becomes to do and the more comfortable you are at doing it. The age of a company can have an impact on business outlook — companies 20 or more years old, according to the Sentiment Report, think positively about business overall (65/100) as compared to a company with less than two years of experience (53/100).
The biggest difference the age of a company has on optimism is the ability to raise wages (45/100 for those in business 20-plus years; 19/100 for less than two years) and ability to hire qualified talent (31/100 for 20-plus years; 10/100 for less than two years).
Less Than 2 Years in Business |
2-9 Years/ in Business |
10-19 Years in Business |
20+ Years in Business |
|
---|---|---|---|---|
U.S. economy | 60/100 | 60/100 | 51/100 | 65/100 |
Overall business outlook | 53/100 | 65/100 | 61/100 | 65/100 |
Regulatory Environment | 44/100 | 54/100 | 50/100 | 50/100 |
Ability to Raise Wages | 19/100 | 49/100 | 48/100 | 45/100 |
Ability to Fill Open Positions w/ Qualified Candidates |
10/100 | 51/100 | 48/100 | 31/100 |
Men remain more optimistic about than women
Even though male business owners expressed a drop in confidence in the U.S. economy, twice that of women business owners in the past six months, men continue to feel better about the economy overall (64/100 to 55/100). The gender gap when it comes to confidence in borrowing money is more than 20 points — 73 points for men and 52 points for women.
Female | Male | |
---|---|---|
U.S. economy | 55/100 | 64/100 |
Overall business outlook | 61/100 | 68/100 |
Regulatory Environment | 50/100 | 52/100 |
Ability to Make Capital Investments |
50/100 | 61/100 |
Access to Capital | 52/100 | 73/100 |
Staying on top of the regulatory landscape
It doesn’t make a difference the size of your business; if you own one you must remain compliant with mandated federal, state, and local regulations. However, as business owners know, that landscape is constantly changing and staying on top of it can prove time-consuming.
As the data in this Sentiment Report revealed, there were very few instances where confidence in the regulatory environment reached above 50 percent. It’s important to know the regulatory issues that could affect your business and have the tools and resources to address them.
About the Paychex Business Sentiment Report
Data included in the Paychex Business Sentiment Report was taken from the results of the Paychex Business Survey, administered by Bredin, a third-party research firm. The survey was conducted online between Feb. 15-26, 2019 and polled 500 randomly selected principals of U.S. companies with 1-500 employees. Results are representative of how small business owners feel, on a scale of 1 to 100 with 1 representing the highest level of pessimism and 100 representing the highest level of optimism. The margin of error for this study was +/- 4 percent. This is the third installment of the Paychex Business Sentiment Report. The previous two reports were released in summer 2018 and fall 2018.
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