With an experienced and successful businessman soon to be at the helm,this isn’t at all suprising.
Small business optimism rocketed to its highest level since 2004, with a stratospheric 38-point jump in the number of owners who expect better business conditions, according to the monthly National Federation of Independent Business (NFIB) Index of Small Business Optimism, released today.
“We haven’t seen numbers like this in a long time,” said NFIB President and CEO Juanita Duggan. “Small business is ready for a breakout, and that can only mean very good things for the U.S. economy.”
The outlook of potential lower taxes and a pull back from over regulation should offer more confidence to the small business owner to operate in a more stable environment.
Hopefully the new Admin and Congress are successful in creating conditions to have businesses tap some credit and grow.
Has the Fed’s zero interest rate policy and quantitative easing had a positive impact on Small Businesses?
Four percent of owners reported that all their borrowing needs were not satisfied, unchanged over the past few months. Twenty-nine percent reported all credit needs met (down 1 point), and 52 percent explicitly said they did not want a loan. However, including those who did not answer the question, presumably uninterested in borrowing, 67 percent of owners have no interest in borrowing. Record numbers of firms remain on the “credit sidelines”, seeing no good reason to borrow yet, in spite of the surge in optimism. As optimism is translated into spending plans, borrowing activity should pick up.
Perhaps the worst thing about the outgoing administration is that business people could never be sure what was going to come down the road next. Business people have to plan ahead. That’s what they do. If they are constantly concerned that some new, crippling burden will be placed on them, they will defer “forward looking” actions or simply give them up.
It takes a long time to change things like that, because a good part of the time expansions or new products take a lot of lead time to put together. It’s a lot easier to accelerate if you’re already moving than it is if you’re coming from a dead stop.
Unfortunately, such optimism reflects much of the financial illiteracy in this country. Lower taxes without corresponding spending cuts do not have a positive impact on the economy in the long run. It can create a good time for a while, just like a credit card binge can. But eventually, someone has to pay the piper and that is always painful.
There’s going to be plenty of infighting in the Republican party about where to cut spending with increased spending on the docket.
Republicans are debating tax reform being revenue-neutral. Which means some group or entity is bound to pay more. Not sure who that may be.
Controversially, the Holman Rule appears to be back - so Congress can target cuts in pay or funding to specific government employees or programs in amendments.
I always felt the gridlock in Congress provides the most certainty. Planning is hard in midst of Congressional debate.
Why Stocks Do Better When Congress Is Out of Session
Like Will Rogers says, when Congress adjourns you can count it a blessing. Well, almost. You see, the problem is that during their recess, they all return to their districts where they stir up trouble with fundraising and campaign speeches.
The only way to get rid of them is for them to return to Washington, but that means Congress is back in session, which means watch out for your freedoms, and hold on to your wallet.
I don’t want to be accused of plagiarism in case I get a presidential appointment some day.