Republicans celebrated small-business optimism reaching an all-time high Tuesday as another clear sign President Donald Trump’s economic agenda of deregulation, tax cuts, and renegotiating trade deals is working.
The National Federation of Independent Business (NFIB) has tracked small-business optimism on a monthly basis for the past 45 years. The index took a massive hit during the economic downturn a decade ago but has been slowly climbing back since. The past year has seen the rate skyrocket to its new record high of 108.8 points for August.
“With small-business optimism at the highest it’s been in 45 years, it’s clear that Americans are prospering, and small businesses are thriving,” House Small Business Committee Chairman Steve Chabot (R-Ohio) said in a statement.
“These historic gains are proof that the new tax law and a reduction in regulations are significantly driving our economic gains. I look forward to seeing continued growth in our economy.”
President Donald Trump entered office shortly before the index started to turn around with the promise to help domestic workers and businesses. He has worked to fulfill that plan by cutting taxes, deregulating, and renegotiating trade deals. Republicans and the president are now pointing to small-business optimism as a sign the plan is working.
Former President Ronald Reagan was in office the last time small businesses hit a record high. Small-business optimism was scored at 108 points in July 1983. Trump just barely missed the record a couple times prior as the economy was starting to show more sustainable signs of improvement.
“Congress & the Administration have worked hand-in-hand to reform the tax code & undo the regulatory burden that has been hampering small business growth for years,” Sen. James Risch (R-Idaho) said in a tweet. “This is a result.”
The NFIB Small Business Optimism Index looks at several factors when surveying small-business owners, including plans to increase employment, plans to make capital outlays, plans to increase inventories, current job openings, and their forecast regarding potential expansion. The responses to each are then scored using a points system.
“Boosting business confidence was a goal of Republicans’ work to transform our tax code last year,” House Ways and Means Chairman Kevin Brady (R-Texas) said in a statement. “The Tax Cuts and Jobs Act took bold steps to create an environment where our Main Street businesses could finally compete and win after being dragged down by the Obama economy for far too long.”
The Tax Cuts and Jobs Act was passed with the aim of lowering taxes and simplifying the tax code. The goal was to decrease the tax burden on individuals and businesses to spur economic growth. Democrats put up a fierce fight against the legislation for months but were eventually defeated when the president signed it into law December 2017.
“With a new historic 20 percent deduction for pass-through business income — which our committee will soon vote to make permanent — as well as many other pro-growth provisions designed for our small businesses,” Brady said, “these local job creators now have a tax code that works for them.”
The NFIB Small Business Optimism Index, moreover, found that new records were set for both job creation plans and unfilled job openings. The last month also tied with May for the percentage of small-business owners who say it is a good time to expand. Capital spending plans were the highest since 2007.
Democrats haven’t so much denied the improving economy as they have taken credit for it. Former President Barack Obama recently repeated his claim that he is responsible for the upswing. The economy did start improving during his time in office as it crawled back from the financial crisis, but at a notably sluggish pace.
Trump entered office with the economy already improving, but many of those trends have accelerated substantially since. White House Council of Economic Advisers Chairman Kevin Hassett argued against the claims Monday by showing how several major trends have changed course since the election of 2016.