Who’s really to credit for the booming economy?
The party responsible may more likely be found in a small business office than the Oval.
NFIB Small Business Optimism Index August 2018
The National Federation of Independent Businesses (NFIB) Small Business Optimism Index reading for August hit 108.8, the organization reported this week. That’s a new record, topping the previous high of 108.0 set way back in July 1983. The NFIB Small Business Optimism Index has been tracked for 45 years overall.
The term optimism may be a bit misleading here, however. Usually this index gauges a sentiment but as NFIB officials are noticing, the record was reached because the feeling of optimism and expectations turned into real actions by businesses.
“At the beginning of this historic run, Index gains were dominated by the expectations: good time to expand, expected real sales, inventory satisfaction, expected credit conditions, and expected business conditions,” says NFIB Chief Economist Bill Dunkelberg in the release announcing the new numbers.
The beginning of the run he’s noting was November 2016. By December of that year, the Index reached the top 5% of its all-time readings and hasn’t gone below that mark since.
Dunkelberg adds, “Now, the Index is dominated by real business activity that makes GDP grow: job creation plans, job openings, strong capital spending plans, record inventory investment plans, and earnings. Small business is clearly helping to drive that 4% growth in the domestic economy.”
So, what’s fueling the record heights for small business optimism? Mostly, according to NFIB data, it’s the amount of jobs previously created and the inability to fill those jobs now. Job creation and unfilled jobs each hit new records in the August report. Job openings, as tracked by NFIB, are at a 45-year high.
NFIB President and CEO Juanita Duggan suggests the policies of the current resident of the Oval Office may be helping, too.
“Today’s groundbreaking numbers are demonstrative of what I’m hearing every day form small business owners — that business is booming. As the tax and regulatory landscape changed, so did small business expectations and plans,” Duggan adds in a prepared statement.
“We’re now seeing the tangible results of those plans as small businesses report historically high, some record breaking, levels of increased sales, investment, earnings, and hiring,” she says.
Here are some other highlights from the NFIB Optimism Index:
- August marked the 9th consecutive month of reported sales gains among small businesses.
- Number of small business owners planning to build inventory rose to a record level, a net 10%.
- A net 34% of owners say now is a good time to expand, tying a record set in May.
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