Small Business Relief Has Mixed Effect on Investors’ Outlook

In this week’s Sentiment Survey special question, we asked AAII members how the small business Paycheck Protection Program (PPP) is impacting their economic outlook. More than two out of five (43%) respondents say their outlook is mixed following the PPP. A majority of this group state that the program will have a positive impact in the short term, but it may be insufficient and unsustainable in the long term. This compares to 21% of respondents who say the program is positively impacting their economic outlook. Their rationale includes the program giving much-needed relief to small businesses and helping to offset some of the tailwinds that these businesses are facing. Additionally, 19% of respondents state that the PPP has not impacted their economic outlook while 17% state that the program is negatively impacting their long-term outlook. The rationale of the latter group includes unsustainable debt levels and concerns regarding higher tax expenses in order to pay for the program.

Here is a sampling of the responses:

• “The PPP requires that 75% of the funds received are spent on payroll expenses. The goal, of course, is to get employees back on payroll and off of unemployment. However, the funds do not address the most pressing need of most small businesses, which is to pay vendors for product received. Covering payroll is nice but maintaining relationships with suppliers is equally critical to viability.”
• “I’m not totally sure but it seems encouraging. At least the government is making an attempt to shore up the small business community. We can only hope that a quick and healthy rebound will generate the tax revenue necessary to fund the programs.”  
• “No matter what Congress enacts in the near term we will continue to have dire news over the next several months.” 
• “It may allow some small businesses to survive that otherwise might not have. But, like everything else the government does, it has been mismanaged. I don’t believe the assistance has gotten to the people who need it.”

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