Small business optimism saw a boost after the Nov. 8 election, which resulted in Donald Trump’s victory over Hillary Clinton, according to a special edition of the monthly National Federation of Independent Business (NFIB) Index of Small Business Optimism, released Tuesday.
The full November index moved up 3.5 points to 98.4, which is just above the 42-year average and only the third time since 2007 that it has broken into above average territory.
“What a difference a day makes,” said Juanita Duggan, president and CEO of the NNIFB. “Before Election Day small business owners’ optimism was flat.”
The NFIB Index of Small Business Optimism is a survey asking small business owners a battery of questions related to their expectations for the future and their plans to hire, build inventory, borrow and expand.
Plans to hire jumped five points from the previous month. Expected higher sales rose from a net one percent in October to net 11 percent in November. Business conditions saw the biggest improvement, moving a net -7 percent to 12.
“This month we bifurcated the data to measure the results before and after the election,” explained NFIB Chief Economist Bill Dunkelberg. “The November index was basically unchanged from October’s reading up to the point of the election and then rose dramatically after the results of the election were known.”
Dunkelberg said without even separating the data, the November results paint a starkly different picture than what the group has seen in the past 94 months.
The bifurcated data was even more dramatic.
Job creation plans increased from a net nine percent through November 8th to a net 23 percent after the election. Expected higher sales rose 16 points, from a net four percent to a net 20 percent. Expected better business conditions, the biggest mover in the survey, rose from a net -6 percent to a net 38 percent, a massive 44-point spike.
“If higher optimism can be sustained, I expect that in the coming months we’ll see an increase in business activity, such as hiring and expanding,” said Dunkelberg.
Whether small businesses remain optimistic and lift the U.S. economy depends on whether the incoming Trump administration and congressional leaders follow through on their plans to reform the tax code, repeal regulations, and fix the broken health insurance system, the NFIB reports.
“Small business owners are clearly encouraged by the election results, but now it’s time for President-elect Trump and congressional leaders to deliver,” said Duggan. “Federal taxes, regulations, and Obamacare are the three biggest impediments to running a small business in America. Small business owners have high expectations that those problems will be addressed.”