Jennifer Pullen, Senior Research Economist


Small businesses in Arizona continue to struggle with the impacts of the Coronavirus pandemic but sentiments regarding the future are improving according to the Census Bureau’s Small Business Pulse Survey. This is cautiously optimistic news as small businesses have been disproportionately impacted by the pandemic. A recent article “Small Business, Big Impact” from the MAP reports a slow but steady recovery in sentiment, employment, and finances for small businesses in Arizona.

The Small Business Pulse Survey provides weekly insights into the challenges small businesses are facing during the Coronavirus pandemic. The survey includes detailed trend information on how small business owners view their daily operations. Small businesses throughout the nation have indicated a steady improvement in their overall sentiment since the beginning of the pandemic. Arizona and Phoenix MSA also posted improved sentiment since the end of April but the measurement has been more volatile (Figure 1).

The sentiment index measures the overall effect of the pandemic on businesses. The index ranges between -1 and +1. The more negative the value the larger the negative effect of the pandemic. A value of zero indicates little to no effect, while positive values indicate a positive effect. Note that no data was collected between 06/27/2020 and 08/09/2020, hence the gap in the series.

Figure 1: Overall Sentiment Index

During the first week of October, 30.2% of small businesses in Arizona reported a decline in revenue. The Small and Medium Business (SMB) Group found that the smaller a business the harder it was hit by the pandemic, this was especially true for companies with less than 20 employees. In Tucson, 84.3% of all establishments had less than 20 employees during 2018. The majority of small businesses fall into the service sector, which includes hard-hit industries like the accommodations and food service sector. To learn more about the distribution of small businesses by industry in Tucson visit the recent MAP article “Small Businesses Disproportionately Impacted by COVID-19 Pandemic”.

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