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Wells Fargo Securities Economics Group: Amid Fiscal Cliff Resolution, Small Businesses Optimism Remains Unusually Cautious

Source: Wells Fargo Securities Economics Group

Economic Worries Exceed Day-to-Day Concerns

  • While the overall Small Business Optimism index rose just 0.5 points in December to its second lowest reading since March 2010, businesses appear to be seeing at least some modest improvement in their day-to-day operations.

  • There were slight increases in a number of the index components, including plans to make capital outlays, retail sales expectations and earnings.

Fiscal Cliff Resolution Is Not Enough to Assuage Fears

  • Taxes are the number one concern facing firms, followed by poor sales and regulations. Frustration about taxes and regulations will likely continue to restrain hiring and investment.

  • The recent resolution of the fiscal cliff may have decreased some uncertainty, but with the budget, sequester and debt ceiling all on the table in March, substantial improvement in small business sentiment may prove illusory for the next few months.


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