Small business owners experience a post-election surge in confidence.

• The Q4 2024 CNBC|SurveyMonkey Small Business Survey shows a rise in optimism regarding various topics, including taxes, regulation, immigration, and trade policy.
• The positive sentiment among Republican business owners has increased significantly, while the outlook among Democrat business owners has decreased.
• While there is less of a partisan divide on inflation, only a minority of business owners believe a peak has been reached on Main Street.

During economic downturns, voters often look for new leadership, as scholars and political strategists have observed, due to the belief that new leadership may provide solutions to pressing economic challenges. Our recent quarterly polls have shown that small business owners are concerned about inflation and other difficulties faced during the Biden administration.

Post-election, optimism is on the rise in the small business community.

The small business confidence index has increased by 11 points in Q4 2024, reaching 62 out of 100, compared to 51 in Q3 2024 and 16 points higher than Q4 of the previous year (at 46).

The surge in positive sentiment among small business owners is being driven by the optimism of Republican business owners. While Democrats reported a decline in sentiment from 62 to 50 points in Q4, this was not enough to offset the massive jump in sentiment among Republicans, who saw a 28-point increase from the previous quarter. Independents also experienced a small bump, from 51 to 57 points in Q4.

Over 2,700 small business owners participated in an online poll held from Nov. 11 to Nov. 18.

Trump tariffs and partisan sentiment

As small business sentiment improved, owners voiced concerns about the uncertainty surrounding increased trade restrictions and the potential for higher costs for imported goods and materials under the new presidency.

The concern about tariffs is evenly split, with 54% of small businesses being "not at all concerned" or "not too concerned," and 46% expressing "very or somewhat concern."

While 76% of Republican business owners are unconcerned about proposed tariffs, 78% of Democrats are concerned. On the other hand, only 24% of Republican business owners are concerned, compared to 22% of Democrats who are not concerned.

The proposed tariffs by President-elect Trump are expected to impact small business owners differently based on their political affiliations. While 42% of small business owners anticipate that tariffs will affect their business, 33% expect no impact. Republicans are more likely to believe that tariffs will not impact them (48%) compared to Democrats (16%). On the other hand, 64% of Democrats think tariffs will affect their business, while only 31% of Republicans share this view.

One in four (23%) small business owners are taking proactive measures before the proposed tariffs, while more than half (56%) are not anticipating any action, and one in five (20%) are uncertain.

Agreement on an inflation peak

The survey results indicate that small business owners have a more optimistic outlook on inflation, with 40% believing it has reached its peak, up from 33% in the previous quarter. This sentiment is shared by 45% of GOP respondents and 40% of Democrat respondents. Despite inflation remaining the top concern for small business owners, only 28% now cite it as their greatest risk, down from 38% in the previous quarter.

The Federal Reserve's ability to control inflation has gained confidence among small business owners, with nearly half (45%) expressing "very or somewhat confidence" in the Fed's ability to do so, up 11 percentage points from the previous quarter (34%). However, the Fed remains a contentious issue where partisan division is significant, with 68% of Democrats expressing confidence in the Fed's ability to control inflation, compared to 31% of Republicans.

The latest CNBC|SurveyMonkey study shows a rise in confidence and optimism among entrepreneurs. However, the question arises whether this trend will persist in the long run as a new administration takes shape and new economic policies are implemented.

—By Eric Johnson, CEO, SurveyMonkey