- Small Business Index from U.S. Chamber of Commerce and MetLife reflects greater economic pessimism among small business owners
- COVID-19 vaccine rollout prompts more optimism, with a majority of businesses saying they will require employees to be vaccinated
- Most small business owners do not expect a return to normalcy for at least six months
Summary by Dirk Langeveld
A survey from the U.S. Chamber of Commerce and MetLife shows that small business owners in the United States continue to be concerned about the impact of the COVID-19 pandemic on their company, even as vaccine distribution offers hope for a return to normalcy.
The U.S. Chamber and MetLife Small Business Index for the first quarter of 2021 stood at 55.9, down three points from the fourth quarter of 2020. This reading was well below the pre-pandemic result of 71.7 in Q1 2020, but a significant improvement from a low of 39.5 in Q2 2020.
Seventy-six percent of respondents aid they were concerned about the impact of the virus on their business. Concern was greater among minority-owned businesses at 86 percent and retailers at 80 percent.
Small business owners were also more pessimistic about the U.S. economy, with 59 percent rating it as poor. This was up from 12 percent in Q1 2020 and 50 percent in Q4 2020. Forty-three percent rated the local economy as poor, up 26 points from Q1 2020 and 11 points from Q4 2020.
Respondents also expected that it will continue to be a long road to recovery. Fifty-nine percent said they anticipate that it will take at least six months to return to normal, up from 56 percent in Q4 2020.
Seventy percent said they were concerned about their employees’ mental health, and 60 percent were actively taking steps to address this concern. Minority-owned business owners had elevated concerns about employee mental health, and were three times as likely as non-minority business owners to provide workers with mental health and wellness resources.
The survey reflected some signs of stability, however. Fifty-two percent said their business was in good financial health, a year-over-year drop of 14 points but in line with sentiments across the previous 10 months.
Forty-five percent said they believe they can operate indefinitely without shutting down, up 5 points from the previous quarter and 22 points from April. Twenty-one percent said they can operate for six months or less without having to shut down permanently, down from 45 percent in April 2020.
Most small business owners had a positive outlook on COVID-19 vaccine distribution, with 54 percent saying it made them more optimistic about the future of their business and 59 percent saying it made them more optimistic about the business climate in their state and the nation as a whole. Half said they would require employees to be vaccinated, with larger firms more likely to mandate vaccination. Among those who said they would require employees to get a vaccine, 53 percent said it was because they wanted their staff to be healthy and 43 percent said it was the right thing to do.
Thirty-two percent said they plan to add employees in the next year, up 5 points from the previous quarter. The share planning to cut their staff held at 14 percent.
The report also found elevated optimism among Northeast small business owners. Fifty percent reported a significant improvement in their business health, up from 38 percent in Q4 2020. Sixty-seven percent said they had a more comfortable cash flow, up 19 points from the previous quarter.
The report cautions that since the survey was fielded between Jan. 14 and 27, it potentially reflects pessimism related to the tumultuous presidential transition or uncertainties about further stimulus efforts. The Economic Aid Act had been approved at the time of the survey, and the American Rescue Plan had just been proposed.
