It has been a hard road, but small businesses are coming back and now express a confidence level not seen since earlier in the year before the virus.
Small Business Optimism Comes Roaring Back
– NFIB rises to 104, highest since Feb. Est 100.9.
– NFIB uncertainty rose 2 points to 92, a three-year high.
– Plans firm for hiring, Cap -ex and inventory building
Despite anxiety small business prepare for growth pic.twitter.com/uQNqugJbBl
— Charles V Payne (@cvpayne) October 13, 2020
The Wall Street Journal fills in the canvas, “Small-business owners confidence in the U.S. economy increased further in September and broadly reached its pre-pandemic levels, data from a survey compiled by the National Federation of Independent Business showed Tuesday. The NFIB Small Business Optimism Index came in at 104.0 in September, a 3.8 points increase compared with August’s 100.2 reading and above the historical 46-year average. Economists polled by The Wall Street Journal had expected a lower level of 101.3…The NFIB is a monthly snapshot of small businesses in the U.S., which account for nearly half of private sector jobs. Economists look to the report for a read on domestic demand and to extrapolate hiring and wage trends in the broader economy…Of owners surveyed, 21% selected the quality of labor as their top business problem, followed by taxes and government regulation, with a 16% and 13%, respectively.”
Details on the report not only show renewed confidence in the economy, but amplify the president’s message that the nation is experiencing a V shaped recovery. Of course, that recovery could stall and wither with the election of tax raising anti-business Democrats. With Biden’s plan to raise taxes and spending to astronomical levels, not only will the recovery die, but the entire economy could fall into a steep downward spiral.
The report from the NFIB also stated that small business owners expect business conditions over the next six month to improve by eight points to a net 32%. Real sales expectations in the next three months increased five points to a net 8%.
The report: “Job creation plans increased two points to a net 23% and job openings also grew by three points to 36%. Twenty-two million jobs were lost in the March-April period, half have been recouped to date, but the pace of improvement appears to be slowing. Government regulations about re-opening will significantly impact the recovery rate for jobs as will consumer attitudes about the safety of mixing with crowds…The net percentage of owners reporting current inventories stocks as ‘too low’ rose two points to 5%, and plans to increase inventories grew by five points to 11%, the highest reading since November 2004. Inventories are very low and need to be rebuilt to support even modest growth in the economy.”
However, the NFIB report stressed, “The political climate is stressful and contributing to uncertainty. The presidential election is weeks away and voters have a choice of very different management teams. All that, in addition to a virus that has killed 200,0000 people to date with more to come … But these issues will be resolved and the small business sector will continue to drive the economy forward,” the report concluded.