U.S. Small-Business Owners' Capital Spending Plans Brighten
Economy

U.S. Small-Business Owners' Capital Spending Plans Brighten

by Elizabeth Mendes

Future spending intentions and reports of past spending are better in mid-2013

WASHINGTON, D.C. -- U.S. small-business owners' capital spending intentions have been trending upward this year; the 26% who now say they are planning to increase spending is up from 20% in the end of 2012. Still, business owners aren't yet as optimistic about their capital spending as they were prior to the recession. From 2003 to early 2008, owners were much more likely to say they were planning to increase rather than decrease capital spending. Today, they are about equally as likely to say they will decrease it as increase it.

Trend: U.S. Small-Business Owners' Capital Spending Intentions Over the Next 12 Months

Capital spending intentions is one of six parts of the Future Expectations component of the Wells Fargo/Gallup Small Business Index, which found owners to be more optimistic overall in the third quarter of 2013.

Small-business owners are also more likely now to report they have been allocating more capital spending in the past 12 months -- with 25% saying so -- than they were in late 2012, when 18% said so. But more owners -- 31% -- still say they have decreased capital spending over the past 12 months than say they have increased it, which has been the case since mid-2008.

Trend: U.S. Small-Business Owners' Capital Spending Habits Over the Past 12 Months

Bottom Line

Small-business owners are not only more optimistic overall about their operating environment this year, but also are becoming more likely to say they are putting money into their businesses. In fact, more business owners say they plan to increase their capital spending than have said so since early 2012. Whether they actually do so remains to be seen.

Still, owners remain about as likely to say they plan to decrease capital spending as to increase it in the coming year. If the current trend continues, though, more owners will plan to increase spending than decrease it in the coming months. Economic conditions could stand in the way of this -- Americans' confidence in the economy has been trending downward since May/June. And July saw "a decline in durable-goods orders and housing sales," according to The Wall Street Journal, which noted that this could point to "a less rosy picture for business investment" in the third quarter.

Regardless, for now, small-business owners' outlook is improving -- whether the trend continues will rely on numerous factors, including consumer spending and the jobs picture in the months ahead.

About the Wells-Fargo Small Business Index

Since August 2003, the Wells Fargo/Gallup Small Business Index has surveyed small-business owners on current and future perceptions of their business financial situations. Visit the Wells Fargo Business Insight Resource Center to access the full survey report and listen to Wells Fargo's quarterly Small Business Index podcast.

Survey Methods

Results for the total dataset are based on telephone interviews with 603 small-business owners, conducted July 22-26, 2013. For results based on the total sample of small-business owners, one can say with 95% confidence that the margin of sampling error is ±4 percentage points.

Sampling is done on a random-digit-dial basis using sampling of small businesses having $20 million or less of sales or revenues. The data are weighted to be representative of U.S. small businesses within this size range nationwide.

In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

For more details on Gallup's polling methodology, visit www.gallup.com.

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