After a brief hiccup over a government shutdown, the small-business economy across America is back humming, according to the latest Small Business Economic Trends (SBET) report released today. Now, it remains to be seen how much damage California policymakers can do to it with purposely self-inflicted wounds.
Federal policies have always prevailed over state ones, and, right now, especially, California small-business owners are delighted to have it that way. Today’s SBET showed small-business optimism back to pre-government-shutdown record highs. That is due mainly to the federal Tax Cuts and Jobs Act, which, two years after its passage, continues to pulsate positive economic results. Meanwhile, in Sacramento, it seems as if every effort is being made to do just the opposite: Policymakers are still struggling to protect millions of independent contractors from the harm done them by the State Supreme Court’s Dynamex decision; the governor wants to re-establish the individual mandate to purchase health insurance and wants to significantly expand paid family leave from six weeks to eight weeks; while legislators toy with ideas to ban paper receipts and impose significant building code requirements by requiring stand-alone rooms for nursing mothers.
The NFIB Research Center has collected Small Business Economic Trends data since 1986. Survey respondents are drawn from NFIB’s membership. The SBET is one of the few archival data sets on small business, particularly when research questions address business operations rather than opinions. Today, it’s the largest, longest-running data set on small business economic conditions available, used by the Federal Reserve, presidential administrations, Congress, and governors and state legislatures across the nation as the gold standard measurement on the economic health of Main Street enterprises. The report is released on the second Tuesday of each month. Today’s survey was conducted in May 2019.
Six components in the Small Business Optimism Index improved, three were unchanged, and one dipped. Capital spending plans increased along with actual outlays. Small business owners’ expectations for sales, business conditions, and expansion all rose, as the previously reported inventory imbalance was resolved. Earnings, job creation, and compensation remained very strong.
According to NFIB President and CEO Juanita D. Duggan, “Optimism among small business owners has surged back to historically high levels, thanks to strong hiring, investment, and sales. The small business half of the economy is leading the way, taking advantage of lower taxes and fewer regulations, and reinvesting in their businesses, their employees, and the economy as a whole.”
NFIB Chief Economist William Dunkelberg agreed. “Small business owners are demonstrating a continued confidence in the strength of the economy and are betting capital spending dollars on it. This solid investment performance is supporting ongoing improvements in productivity and real wages.”
California are you listening?