Small Business Confidence On The Increase In New Political Environment

The stock market rally that has continued more or less unabated since the election of Donal Trump has gotten a lot of attention — but according to most economists, the more important factor to watch is how small business owners feel — and respond — to the new administration.

Small businesses — though not quite the economic powerhouse they were even a year ago — still account account for half of private sector employment.

And — according to groups of small business owners profiled by The New York Times — that sentiment is on the rise. Entrepreneurs are bullish about their businesses and invigorated by the CEO president, whom they tend to view as a small business owner much like them (albeit a very rich and successful one).

The small-business confidence index, a measure by industry trade groups and the National Federation of Independent Business, saw its largest monthly increase since 1986 with the election of Donal Trump.  And it has continued to reflect consistent gains as the president pushes for lower taxes, fewer regulations and a repeal of President Barack Obama’s health care initiative.

Now, there are a few grains of salt to read this data with — one of which is that it is easy to jump high if one starts from a small number. Since 2009, in the wake of the financial crisis, the index was either pointing downward or barely moving at all. The perception of a heavier regulatory burden combined with a weak economy were acting as dual anchors to growth.

But those anchors are apparently lifting. And, as The Times noted — while there may be no direct correlation between the confidence and the new president, there is clearly some powerful psychology at work.

“That guy is a junkyard dog, doing his tweets at 3 a.m. and taking on the news media — I just get strength from him,” one SMB owner noted. “And I have to say, it makes you feel gutsy — ready to step up and start investing again.”


New PYMNTS Report: The CFO’s Guide To Digitizing B2B Payments – August 2020 

The CFO’s Guide To Digitizing B2B Payments, a PYMNTS and Comdata collaboration, examines how companies are updating their AP approaches to protect their cash flows, support their vendors and enable their financial departments to operate remotely.

Click to comment