Small business owners’ confidence in the economy is surging just as the popularity of Republican tax cuts reaches new highs – even among Democrat voters.
That’s the cheering message for the White House from three recent opinion surveys which studied attitudes to the reforms.
The Tax Cuts and Jobs Act which President Donald Trump signed into law last December introduced the biggest single cut in corporation tax ever seen in the US, slashing the rate from 35 to 21 percent.
And the first Small Business Confidence Index compiled by CNBC/SurveyMonkey since the Act shows a new high of 62, a record five point leap from last year’s fouth quarter figure.
The new index published on 20 February also shows that far more small-business owners now have optimistic expectations of the effects of the new tax regime on their businesses. At the close of 2017, opinion appeared evenly split, but this latest survey shows 46% of owners anticipating a positive impact, as against just 23% who fear a negative effect.
The findings reinforce those of the National Federation of Independent Business (NFIB)’s monthly Small Business Economic Trends survey published in January. The Federation’s index of small-business optimism was 104.9 for December, closing a year in which the monthly average had been a record high of 104.8.
“Main Street is roaring,” said NFIB President and CEO Juanita Duggan, noting that 32% of the business owners surveyed agreed that “now is a good time to expand”, the highest figure recorded since the survey began in 1973. “The record level of enthusiasm for expansion follows a year of record-breaking optimism among small businesses”, added Duggan.
Molly Day, Vice-President of Public Affairs at independent lobby group the National Small Business Association (NSBA), also welcomed the new tax laws, but stressed that the increasingly optimistic mood was also down to a belief that the economy is generally strengthening.
The NSBA’s Year-End Economic Report for 2017 reported “significant gains in the overall small-business outlook” and recorded that more than 50% of small-business owners believe that the US economy is performing better now than six months ago.
By contrast, the same reports for December 2016 and 2015 showed positive sentiment of just 43% and 20% respectively.
59% of respondents expected the economy to expand in 2018 as opposed to just 9% who anticipate a contraction. For comparison, as recently as July 2016 a mere 29% were expecting economic growth in the year ahead.
Small-business owners are also increasingly optimistic about the prospects for their own businesses. 84% say they are “confident” and more than 30% “very confident” about the future, the highest figure seen for more than a decade.
So what’s driving this newfound small business confidence?
Independent analysts estimate that some 80% of all taxpayers, and 9/10 of middle-income Americans will pay less tax in 2018. So, a commonsense explanation might be that businesses are reaping the benefits as customers increase their spending in response to finding more money in their weekly and monthly paychecks.
And in addition to increases in regular take home pay, many workers are benefiting as around 250 companies including S&P household names such as American Airlines, AT&T, Bank of America, Disney and Walmart announce cash bonuses of $1,000 and upwards, alongside improvements to 401K contributions and other benefits in the wake of the tax cut.
Many firms are also bringing home assets held overseas and substantially increasing their charitable giving.
It’s little wonder then that Democrats are struggling to counter the popularity of the Trump tax measure, and that their attempts to portray it as a tax giveaway for the rich appear to be backfiring.
A SurveyMonkey poll for The New York Times published on 20 February showed overall voter support for the tax cut now tops 50%, and even among Democrat voters it’s 19%. Still low, but a significant increase on the miserable 8% recorded at the time of the Act’s passing.
“Public opinion is moving in the direction of this bill,” commented Survey Monkey’s Chief Research Officer, Jon Cohen. “Considering where it was, it is dramatically different.”
And in crassly dismissing as “crumbs” the richly deserved gains of so many hard working Americans, multi-millionaire Nancy Pelosi seems unlikely to have hit on a smart way of reversing the trend.
~ Conservative Zone
