U.S. small businesses are growing despite trade uncertainty

Confidence in the U.S. economy remains high.

September 16, 2019 – Small business spending is increasing, with Visa’s Small Business Spending Index up 18 points. Following a quarter of flat growth, small businesses are expanding and their revenues are increasing. According to Visa's small business survey conducted in late June, nearly half of small businesses said their revenues have increased in the past three months, up 5 percentage points from the first quarter, and almost a quarter hired more employees, up 9 percentage points. Confidence in the U.S. economy remains high, with more small businesses saying the economy had grown stronger last quarter. However, as tariffs continue to make headlines, one in five businesses worry their business will suffer in the years ahead.

While trade uncertainty is causing some concern, small businesses remain positive overall. They continue to invest in their businesses and expand, which supports overall economic growth. Wayne Best, Visa Chief Economist

Line chart shows Visa business credit card payment volume growth indexed from 1Q2013 – from 121 in 2Q2013 to 202 in 2Q2019, up 18 points.

Source: Visa data. Last actual: Calendar year 4Q2018. *Per active account.

Visa Small Business Spending Index
(Payment volume on Visa business credit cards,* indexed to 1Q2013)

More highlights:

  • Borrowing growth decelerated year-over-year due to higher interest rates that discouraged borrowing through the first half of 2019. However, with the Federal Reserve’s recent rate cut, borrowing growth may pick up.
  • Risk remains elevated as businesses increase their spending. Despite a drop of one point in the second quarter, the charge-off index remains at heightened levels. On the other hand, delinquencies have dropped due to seasonal factors.
  • Advertising, which continues to be a key spending driver, has grown year-over-year; however, more than half of business owners struggle to understand the practice, such as knowing the most effective advertising channels or how to target the right audience.

Small businesses planning to spend more (by region)

U.S. small businesses planning spend increase (by region): the South at 31% planning to increase spend, NE at 29%, the West at 28% and Midwest at 20%.

Business Expansion

Pie chart shows 34% of small businesses have expanded, with 47% hiring more people, 25% adding new locations and 20% growing by mergers/acquisitions.

Source: Visa Business and Economic Insights quarterly small business survey, conducted by Kelton.

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