Nice Trumped up spike, led entirely by expectations the new President would make everything better, but even with that low by historical standards:
The small business optimism index rose a sharp 3.5 points in November to 98.4, significantly exceeding expectations and posting the highest reading since May 2015. The NFIB said small business optimism remained flat leading up to Election day, but then rocketed higher, ignited by business owners’ expectations of better business conditions in Washington. At 98.4, the index is above the 42-year average, only the third time it has broken above since 2007.
All but 2 of the 10 components of the index posted gains in November. The largest gain was recorded in expectations of the economy to improve, which rose 19 points to 12, followed by expectations of higher real sales, up 10 to 11. The lone decline was in capital outlays, down 3 points to a still strong 24. Current inventories were unchanged at minus 4.
The optimistic outlook also improved an already rosy employment picture, with current job openings rising 3 points to 31. Plans to create new jobs were up 5 points from October to 15 percent, the strongest reading since the recovery.
Despite the general optimism, business owners remained quite down on earnings trends, which nudged up only 1 point to the still lowest reading of all components at minus 20. On the other hand, the net percent of owners raising average selling did rise 3 points to 5 percent, and looking ahead, a net 19 percent planned price hikes, up 4 points.
“What a difference a day makes,” said Juanita Duggan, President and CEO of the National Federation of Independent Business (NFIB). “Before Election Day small business owners’ optimism was flat, and after Election Day it soared.”
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.
President-elect Donald Trump’s race to enact the biggest tax cuts since the 1980s went under a caution flag Monday as Senate Majority Leader Mitch McConnell warned he considers current levels of U.S. debt “dangerous” and said he wants any tax overhaul to avoid adding to the deficit.
“I think this level of national debt is dangerous and unacceptable,” McConnell said, adding he hopes Congress doesn’t lose sight of that when it acts next year. “My preference on tax reform is that it be revenue neutral,” he said.
During a news conference, McConnell also poured cold water on the idea of a massive stimulus package, effectively laying out markers on taxes and spending that that could cramp Trump’s ambitions.
Back to recessionary levels of growth: