U.S. President Donald J. Trump (C), flanked by Gary Masino (L) of the Sheet Metal Workers Union, Telma Mata (2nd R) of the Heat and Frost Insulators Allied Workers Local 24 and United Brotherhood of Carpenters General President Doug McCarron (R), holds a roundtable meeting at the White House on Jan. 27. 2017. (Photo: Reuters)
NFIB Small Business Optimism Index showed confidence is still holding at record high levels it reached following the election of President Donald Trump. The latest survey by the National Federation of Independent Business (NFIB) in May matched the April reading of 104.5, leaving the index at the historically high level for six straight months.
“The remarkable surge in optimism that began last year right after the election shows no signs of slowing down” said NFIB President and CEO Juanita Duggan. “Small business owners are highly encouraged by the President’s regulatory reform agenda, and they remain optimistic there will be tax reform and health-care reform. This is a policy-driven phenomenon.”
Five of the Index components posted a gain, four declined, and one remained unchanged. Hiring activity in May was near the highest levels in the 43-year history of the Index with average employment change per firm at 0.34. Fifteen percent (15%) of owners reported hiring 3 workers per firm, while just 9% reported cutting 2.3 workers per firm.
A solid majority of owners, 59%, said they were either hiring or trying to hire in the month of May, though 51% said they found few or no qualified workers. Labor Secretary Jim Acosta gave a press conference on Monday to discuss the skills gap and the Trump Administration’s promotion and expansion of workers’ apprenticeship programs.
Still, 86% of owners who said they tried to hire reported that to be an obstacle. Further, 19% of all owners in the survey said finding qualified workers was their top concern, making it the second-biggest problem for small business.
“The tight labor market has been a persistent problem for small business owners for the past several months, and the problem appears to be getting worse,” said NFIB Chief Economist Bill Dunkelberg. “It’s forcing small business owners to increase compensation, which we’re seeing in this data, to attract new workers and keep the ones they have. But it also means a lot of small business owners are short-handed. They can’t keep up with customer demand because the labor pool isn’t producing enough qualified workers. It’s a significant structural problem in the economy that policymakers will have to watch.”
Twenty-eight percent (28%) reported plans to make capital outlays, which reflects a 1-point gain from April. It’s still well below historical levels for periods of growth.
“Typically, in a strong economy, we see a lot more spending on capital,” said Mr. Dunkelberg. “We’re seeing increased hiring activity and some other positive signs, but the capital-outlays component is the missing ingredient for robust economic growth.”
That “missing ingredient,” according to Ms. Duggan and most other analysts, is tax reform. It’s also President Trump’s top legislative priority.
President Trump hosted congressional leaders at the White House last Tuesday to discuss that agenda for the remainder of the year. The President put an emphasis on his desire to sign tax reform before the end of the year, and to repeal ObamaCare.
“We will have zero backing from the Democrats,” President Trump said at his first full Cabinet meeting on Monday. “If we had the greatest bill in the history of the world, we wouldn’t get one vote from the Democrats. That’s their game. They’re obstructionist, and that’s sad.”
Senate Republicans are weighing the option to combine health care reform and tax cuts into one bill, congressional sources told People’s Pundit Daily. The plan is an effort by a slow-to-act Congress to expedite the passage of President Trump’s legislative agenda.
“If Congress wants small businesses to invest in the economy, then they must cut taxes and simplify the code,” Ms. Duggan said. “The President’s tax plan would slash taxes for small businesses and level the playing field for businesses of every size and structure. Congress also has other good ideas for tax reform, but they need to stop talking and pass a bill.”
White House legislative affairs director Marc Short said the administration was working together with House and Senate leaders to put together a single tax reform package that lawmakers would take up after Labor Day. Majority Leader Mitch McConnell, R-Kty., previously put a “budget neutral” standard on tax reform, which the White House places secondary to achieving economic growth.
“We know, based on our data, that small business owners are watching very closely what is happening in Washington,” she continued. “The optimism is based on the expectation of policy changes, and that means tax reform.”
