The new deal that was struck in Washington may have averted the dreaded “fiscal cliff” for the time being, but new survey data indicates that some damage may have already been done. The Vistage International quarterly survey is taken from a pool of 1,601 small and medium-sized U.S. businesses. Those polled revealed that one in four had reduced hiring and investments in late 2012 because of concern over the then-impending fiscal cliff.
The deal signed by President Obama on January 2 alleviated the full impact of tax increases and budget cuts that would have taken effect had no deal been reached. But 30 percent of CEOs polled by Vistage International reported having hired fewer people in 2012 due to concern about the potential of a deal not being agreed upon in time. About 33 percent reported decreased investment for the same reason.
Significant uncertainty remains about the status of the U.S. economy; specifically, necessary spending cuts that have yet to be hashed out. According to many of the small business executives surveyed, this uncertainty is already affecting plans for 2013. More than one-third of respondents named economic uncertainty as the most important business issue they face. One-fifth of respondents said they intend to cut spending over the next year–the highest percentage since the 2009 survey.
Vistage International’s CEO Confidence Index fell to 87.0 in the fourth quarter of 2012. The index has fallen for three straight quarters. Business owners still have some reason to be optimistic–if cautious–for 2013, as over 40 percent of those surveyed expect economic conditions for this year to remain about the same, and 26 percent expect conditions to improve.
Debenedetti, Gabriel. “‘Fiscal Cliff’ Worries Depressed Small-Biz Hiring: Survey.” Reuters, 1/9/13.