Confidence in Small Business at a 12-Year High

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As of December 2016, the National Federation of Independent Business reported that small business confidence was up to 105.8 points, the highest rating since December 2002.

The National Federation of International Business (of NFIB) is an advocacy group that helps support the needs of independent business, protecting them from government interference. The NFIB is the largest small business association in the country.

The twelve-year high is only the tip of the iceberg, however; the NFIB reported that the confidence rating increase between November and December (increasing by 7.4 points) was the highest monthly increase since July 1980

Due to the higher confidence, there has also been an increase in business activities such as capital investment. In fact, a net 50% of firms in December said that they expected the economy to grow.

A large portion of what is causing the increase in confidence is said to be the presidential election results. Many business owners believe that the coming Trump presidency will greatly improve the economy.

This is interesting due to the fact that Trump’s plans for economic reform (which include health care reforms, tax reforms on business, moratoriums on new government regulations) are projected benefit the rich more than the poor.

Perhaps it is not merely confidence in Trump that has inspired business owners but rather a step away from the Obama administration which harmed many small businesses. Under Obama, small businesses were forced to pay health care costs for employees; currently, any startups with 50 or more employees must cover their health costs or be fined $2,000 dollars per employee.

Furthermore, Under Obama six of the seven highest total number of pages of rules and regulations published in a given year in the Federal Register; these regulations give an extreme advantage to corporations that can afford to hire lawyers to make sure that the company is acting within the law.

Also associated with government interference on small business growth is the ability for patent lawsuits to be made so easily by ‘patent trolls.’ The Consumer Technology Association has said, “Eighty percent of patent troll victims are small and medium-size businesses who lack the financial resources to fight the trolls' bogus infringement claims.”
Although there was potential legislation for ending the patent troll lawsuits, Senate Democratic Leader Harry Reid ended the proposal.

Whether or not the Trump election is a main catalyst for the confidence increase, there have been improvements in business. UBS reported that smaller businesses reported fewer declining earning (14% in December versus 20% in November).

These confidence indicators are hoped to play out to an improved economy for small business in America, which had not been a trend as of late with only a net 12% of firms in November that said they’d expected the economy to grow.


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- Norm Franz