(INDIANAPOLIS) – Small business optimism took another dive in April, falling 5.5 points to 90.9, with owners expressing certainty the economy will weaken in the near-term, but expecting it to improve over the next six months. The Optimism Index has fallen 13.6 points over the last two months, with nine of 10 Index components declining in April and one improving.
“This latest report bears out what we have all been sensing. The assistance from the federal legislation has finally begun to flow to some small businesses and the economy is beginning to open up and show some life,” said NFIB State Director in Indiana, Barbara Quandt. “Unfortunately for some, it may be too little too late. Small business owners are usually the most optimistic people on the planet, but turning the corner on this crisis is clearly going to take time and additional legislation to provide them with some liability protection.”
In North Webster, Dan Thystrup was expecting his best year ever. In March, the Dutch native received a large order from Walt Disney World to make swan boats for their Swan and Dolphin Hotel in Florida. Then the coronavirus hit. Now, that order is on hold indefinitely. Another client, a mall in Canada, couldn’t pay Thystrup when he tried to deliver their order.
Some of Thystrup’s swan paddle boats in a Chicago park.
“My customers are theme parks and shopping malls – the hardest hit industries. Things trickle down. We were hit extremely hard,” said Thystrup. His small business, Adventureglass, makes paddle boats. Thystrup’s family background was in amusement parks, and he and his wife bought Adventureland in North Webster, after he immigrated from Denmark. When they needed new boats, Thystrup remembered old pictures from his grandfather’s photo album of boats shaped like swans. He started selling all kinds of animals – from flamingos to dragons – and his small business was so successful he shut down the amusement park to focus on the paddleboats. That was then. This is now – the time of the coronavirus crisis.
Thystrup got money from the Paycheck Protection Program, but he says that will only last him two and a half months. He estimates he won’t start seeing his business return for another year – that leaves another eight months.
Thystrup is one of many Indiana small business owners who are now less optimistic about the short-term economy in Indiana.
“I’m holding on by the skin of my teeth. I am not optimistic about the near future. I’ve made a cheaper model of my paddleboat that I hope to sell to individual customers, a new market for me, but I really don’t know if I’ll be here in another year. If things go south at least I know I did everything I could to survive,” said Thystrup.
Thystrup has started producing lower cost paddle boards for individual customers to try and make it through the next eight months, when he feels like his main clients will start placing orders again.
Spotlighting small business owners’ need for more flexibility is that real sales expectations in the next six months declined 30 points to a net negative 42 percent, the lowest reading in the survey’s 46-year history. The second-lowest reading was net negative 24 percent in April 1980. A net negative 11 percent of all owners (seasonally adjusted) reported higher nominal sales in the past three months, down 19 points from March.
The NFIB Uncertainty Index fell 17 points in March to 75, with most owners quite certain that the economy will weaken in the near-term. However, reports of expected better business conditions in the next six months increased 24 points, rebounding from a 17-point decline in March. Owners’ optimism about future conditions indicates they expect the recession to be short-lived.
Other key findings from April’s Optimism Index included:
- Earnings trends declined 14 points to a net negative 20 percent. Among owners reporting weaker profits, 39 percent blamed weak sales, 16 percent blamed usual seasonal change, six percent cited price changes, four percent cited labor costs, and two percent cited materials costs. For owners reporting higher profits, 63 percent credited sales volumes and 17 percent credited usual seasonal change.
- The percent of owners thinking it’s a good time to expand lost 10 points falling to three percent, its lowest level since March 2010.
As reported in last week’s NFIB’s monthly jobs report, job creation plans fell eight points to a net one percent, the lowest level since December 2012. Three times as many owners reduced employment as reported an increase in their workforce. Forty-seven percent reported hiring or trying to hire (down seven points), but 41 percent (87 percent of those hiring or trying to hire) reported few or no “qualified” applicants for the positions they were trying to fill. Twenty-four percent (seasonally adjusted) of all owners reported job openings they could not fill in the current period, down 11 points.
About the Small Business Economic Trends
The NFIB Research Center has collected Small Business Economic Trends data with quarterly surveys since the 4th quarter of 1973 and monthly surveys since 1986. Survey respondents are drawn from a random sample of NFIB’s membership. The report is released on the second Tuesday of each month. This survey was conducted in April 2020. For more information about NFIB, please visit NFIB.com.