Steady growth, but U.S. small businesses show signs of caution

More than half expect their business to have positive cash flow in 2020, but many also worry about global and political instability.

December 18, 2019 – Following a strong summer, third quarter growth was relatively flat across Visa's three health indexes for small business spending, borrowing and risk. Small businesses were also showing signs of caution, with one in five small businesses (17 percent) saying the U.S. economy was weaker than the previous quarter, an increase of 5 percentage points, according to Visa's third quarter small business survey. This may be because a similar number of small businesses (19 percent) feared that tariffs would have a negative impact on their business as they look towards 2020 and beyond.

Small businesses remain the bedrock of the economy. However, with most reporting flat revenues last quarter and a growing number saying their confidence in the economy has been shaken, small businesses could adopt a more cautious stance going forward.
— Wayne Best, Visa Chief Economist.

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

Line chart showing payment volume growth on Visa business credit cards.

Line chart showing payment volume growth on Visa business credit cards indexed from 1Q2013 and ranging from 121.5 in 2Q2013 to 202.8 in 3Q2019, an increase of 0.8 points since the last report.

Source: Visa Business and Economic Insights, Fall 2019 Small Business Outlook.

*Payment volume and balances per active account. See methodology notes on page 2 of the fall small business outlook report 2019 document for more details.

More highlights:

  • Nearly one-third of small businesses expanded in the third quarter, with the top growth area being new products and services.
  • Debt reduction among small businesses has slowed, with the average amount owed increasing from $4,050 to $5,000 in the third quarter, although most small businesses expected to keep their borrowing the same in the fourth quarter.
  • As small businesses look to 2020, many are cautious but optimistic about the next year. More than half expect their business to have positive cash flow in 2020, but many also worry about the potential negative impact that global and political instability could have on their business.

Businesses are cautious as global and political instability in the future can impact their business:

Small business concerns about global and political instability, including negative impact to sales.

Source: Visa Business and Economic Insights, Fall 2019 Small Business Outlook, third quarter small business survey, conducted by Kelton on behalf of Visa.

Small business concerns about global and political instability, including negative impact to sales (47%), impact of U.S. tariffs on business (45%), limit ability to purchase materials (43%), negative impact of presidential election (33%), and the possibility of a global recession (27%).

Disclaimer

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