(Editor’s note: The following press release was received from NFIB/California)
Small business optimism remained flat nationally leading up to Election Day and then rocketed higher as business owners expected much better conditions under new leadership in Washington, according to a special edition of the monthly NFIB Index of Small Business Optimism, released today.
What a difference a day makes. Before Election Day small business owners’ optimism nationally was flat, and after Election Day it soared.
Whether we see this national small business optimism translate to the hostile small business climate here in California remains to be determined. We are encouraged by early indications of relief for small business from Washington, but we acknowledge that the California Legislature does not hesitate to reach far beyond the laws and regulations of the federal government to implement their agenda.
The NFIB Index of Small Business Optimism is one of the oldest and most widely respected economic research reports in the country. The survey asks small business owners a battery of questions related to their expectations for the future and their plans to hire, build inventory, borrow, and expand.
“This month we bifurcated the data to measure the results before and after the election,” explained NFIB Chief Economist Bill Dunkelberg. “The November index was basically unchanged from October’s reading up to the point of the election and then rose dramatically after the results of the election were known.”
The full November index, calculated as it is every month, improved 3.5 points to 98.4, which is just above the 42-year average and only the third time since 2007 that it has broken into above average territory.
Plans to hire jumped five points from the previous month. Expected higher sales rose from a net one percent in October to net 11 percent in November. But the blockbuster was expected better business conditions, which shot from a net -7 percent to 12.
“Even without separating the data, the November results paint a starkly different picture than what we’ve seen in the last 94 months,” said Dunkelberg.
The bifurcated data was even more dramatic.
Job creation plans increased from a net nine percent through November 8thto a net 23 percent after the election. Expected higher sales rose 16 points, from a net four percent to a net 20 percent. Expected better business conditions, the biggest mover in the survey, rose from a net -6 percent to a net 38 percent, a massive 44-point spike.
“If higher optimism can be sustained, I expect that in the coming months we’ll see an increase in business activity, such as hiring and expanding,” said Dunkelberg.
Whether small businesses remain optimistic and lift the U.S. economy depends on whether the incoming Trump administration and congressional leaders follow through on their plans to reform the tax code, repeal regulations, and fix the broken health insurance system.
“Small business owners are clearly encouraged by the national election results, but now it’s time for President-elect Trump and congressional leaders to deliver,” added Scott. “Taxes, regulations, and Obamacare are the three biggest impediments to running a small business in America. Small business owners have high expectations that those problems will be addressed.”
To view the entire Index of Small Business Optimism, please visit www.nfib.com/SBET.