Economic Growth – Optimism Heightened

Optimism Heightened

Small business owners continue to be very optimistic about future economic growth, according to a recent survey. It shows that optimism heightened but with some mixed reviews.

The National Federation of Independent Business (NFIB) released its February Small Business Optimism Index in March. The reading was the highest it has been in 43 years. The NFIB, however, noted that evidence on the economy is mixed. The New York Federal Reserve puts first quarter growth at 3.1% while the Atlanta Federal Reserve is looking at only 1.8%. Both can look to the same data.

The gulf between liberals and conservatives, however is large. The University of Michigan/Reuters poll in February illustrated this, with the Expectations Index at 55 among Democrats, 120 for Republicans and 89 for Independents. The Democrats expect the worst, the Republicans the best. Spontaneous positive references to economic policy were made by a record 28% of consumers, 26% made negative references. Reality will resolve the gap.

Small businesses are optimism heightened in hopes that there will be a new health care law, tax reform, and relief from regulations.

“It is clear from our data that optimism skyrocketed after the election because small business owners anticipated a change in policy”, said NFIB President and CEO Juanita Duggan. “The sustainability of this surge and whether it will lead to actual economic growth depends on Washington’s ability to deliver on the agenda that small business voted for in November. If the health care and tax policy discussions continue without action, optimism will fade”.

The index fell in February, but still is considered very high.

The NFIB noted that the slight decline follows the largest month-over-month increase in the survey’s history in December. It showed another rise in January.  Despite a small decrease, nearly half of owners expect better business conditions in the coming months.

The elephant in the room remains to be whether the Trump administration will be able to deliver on the many policies small business owners are counting on. The health care legislation stalled in March. Tax reform may not be dealt with until the end of the year. It remains to be seen what other major regulations will be dismantled.

We are feeling optimism heightened here at Torrid! You are reporting to us that business is picking up for many of our customers and that their clients are feeling more hopeful overall. Check out our June newsletter here.