- The small-business optimism index from the National Federation of Independent Businesses came in at 104.9 in December.
- The index’s average monthly reading last year was 104.8, the highest for any year in the history of its survey.
- Both the NFIB’s CEO and its chief economist attributed the boost in confidence to policy changes under the Trump administration.
Small-business confidence hit a record high in 2017, according to the National Federation of Independent Businesses.
The right-leaning lobbying group on Tuesday released its latest index of small-business optimism, capping what it said was “an all-time record-setter” of a year.
The index came in at 104.9 in December. The NFIB says the index’s average monthly level last year was 104.8, the highest in the history of its survey.
Juanita Duggan, the group’s president and CEO, pinned the increase in optimism on policy changes under President Donald Trump.
“With a massive tax cut this year, accompanied by significant regulatory relief, we expect very strong growth, millions more jobs, and higher pay for Americans,” Duggan said in a release.
The NFIB’s chief economist, Bill Dunkelberg, also credited the surge in optimism to Trump.
“The 2016 election was like a dam breaking,” Dunkelberg said. “Small-business owners were waiting for better policies from Washington, suddenly they got them, and the engine of the economy roared back to life.”
The NFIB late last year came out against the first version of the Republican tax bill, saying it would not be wholly beneficial to small-business owners.
But after changes to the bill that made tax cuts more generous for owners of entities known as pass-through businesses, whose profits the owner books as personal income, the NFIB supported the final version that recently became law.
Ian Shepherdson, the chief economist at Pantheon Macroeconomics, said that while the group’s headline number was encouraging, some of the underlying trends in owners’ spending intentions were still lagging.
Shepherdson noted that the percentage of owners who say they are increasing capital expenditures – making large investments in their businesses – remained near a nine-month low in November.
“The index strengthened in the spring and early summer but then dropped immediately after the hurricanes,” Shepherdson wrote. “Its failure then to rebound is disconcerting and hard to explain, but at least it appears no longer to be falling.
“Still, we need to see stronger numbers over the next few months if the story of sustained strength in capex this year is to materialize,” he said.
The NFIB survey is one of a slew of readings – such as consumer confidence and manufacturer surveys from the various Federal Reserve branches – that have improved over the past year. So far, that has contributed to a solid increase in economic activity, but not exceeding the long-term trend for the post-recession recovery.