RALEIGH –Small business confidence blasted off the day after the 2016 election and remained in the stratosphere for all of 2017, making last year an all-time record setter for the NFIB Index of Small Business Optimism, released today.
“2017 was the most remarkable year in the 45-year history of the NFIB Optimism Index,” said NFIB President and CEO Juanita Duggan. “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.”
State-specific data is unavailable, but NFIB State Director Gregg Thompson said, “Things are really looking up for small businesses.”
The Optimism Index for last month came in at 104.9, slightly lower than the near-record November report but still a historically exceptional performance. That makes 2017 the strongest year ever in the history of the survey. The average monthly Index for 2017 was 104.8. The previous record was 104.6, set in 2004.
“We’ve been doing this research for nearly half a century, longer than anyone else, and I’ve never seen anything like 2017,” said NFIB Chief Economist Bill Dunkelberg. “The 2016 election was like a dam breaking. Small business owners were waiting for better policies from Washington, suddenly they got them, and the engine of the economy roared back to life.”
Two of the December components posted gains, five declined, and three remained unchanged. Moving the Index moderately lower were declines in Expected Better Business Conditions (11-point decline) which tends to fluctuate sharply and Inventory Plans (8-point decline). Small business owners were bedeviled by a labor shortage in 2017 that grew more intense as optimism rose. The NFIB Jobs Report last week showed that problem reaching record levels.
Offsetting the dip in Expected Better Business Conditions was a dramatic,14-point improvement in Actual Sales for December. In November, a net negative five percent of all firms reported sales increases. A net nine percent reported higher sales in December, indicating a very strong holiday season for small business.
“There’s a critical shortage of qualified workers and it’s becoming a real cost driver for small businesses,” said Dunkelberg. “They are raising compensation for workers in order to attract and keep good employees, but that’s a positive indicator for the overall economy.”
Driving record optimism in 2017 was the expectation of better economic policies from Washington. Suspending the regulatory assault on business and now a massive tax cut answered two of the three top concerns for small business owners, according to NFIB research.
“The lesson of 2017 is that better policies make for better economic results,” said Duggan. “The evidence is overwhelming that small business owners pay close attention to Washington, and that federal policies affect their decisions on whether to hire, whether to invest, whether to grow inventory, and whether to seek capital.”