Small business optimism at the national level near all-time high

Shawn Lewis
NFIB/CA State Communications Director

Not since the roaring Reagan economy has small business optimism been as high nationally as it was in November, according to the National Federation of Independent Business’ monthly Index of Small Business Optimism, which was released today. The NFIB Optimism Index soared past 107, which comes very close to our all-time record high in 1983.

On the national level, we haven’t seen this kind of optimism in 34 years, and we’ve seen it only once in the 44 years that NFIB has been conducting this research. Small business owners across the country are exuberant about the economy, and they are ready to lead the U.S. economy in a period of robust growth.

This news is almost bittersweet for California. As reform at the federal level benefits small businesses across the country, our job creators have even less incentive to remain or grow in California with our incredibly high state taxes and labor regulations. As Washington embraces changes to support our job creators, including much-needed tax reform, Sacramento must answer the call and make policy changes to keep struggling small businesses in our state.

The NFIB Research Foundation has collected Small Business Economic Trends data with quarterly surveys since the 4th quarter of 1973 and monthly surveys since 1986. Survey respondents are drawn from NFIB’s membership. The report is released on the second Tuesday of each month. These findings come from our November 2017 survey.

The NFIB indicators clearly anticipate further upticks in economic growth, perhaps pushing up toward four percent GDP growth for the fourth quarter. This is a dramatically different picture than small business owners presented during the weak 2009-16 recovery.

Job Creation plans increased six points last month, providing more evidence of a strong labor market. The number of owners who said it’s a “Good Time to Expand” rose four points; Inventory Plans increased by three points; Inventory Satisfaction increased by three points; and Actual Earnings Trend moved up two points.

Job creation faded, but hiring plans soared, primarily in construction, manufacturing, and professional services. Finding qualified workers has been a persistent problem all year for small business owners, a reliable sign of growing economy. Last month, it was the second most important problem facing small business owners. Only taxes polled higher.

Small business owners are paying very close attention to what is happening in Washington. They continue to list taxes as their number-one problem, but they now have clear expectations that Congress and the President will address that problem. As long as Congress and the President follow through on tax reform, 2018 is shaping up to be a great year for small business, workers, and the economy at the national level.

Of course, while all of this is good news from the national perspective, California has its role to place in embracing pro-growth reforms which reward small businesses for remaining and growing in this state. Without legislation at the state level to support our job creators, positive reforms from Washington such as tax-reform will give businesses even more reason to leave California.

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