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NFIB Small Business Optimism Index rose 3.5 points in November to 98.4
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The Index of Small Business Optimism rose 3.5 points to 98.4, a substantial gain to just above the 42-year average of 98. Eight of the 10 Index components posted a gain, one declined and one was unchanged. Expectations for real sales gains and outlook for business conditions accounted for 69 percent of the gain. The two employment components added 20 percent of the gain. The remaining six components were little changed.
Many promises were made in the heat of the election, but delivering will, as always, be a challenge. Counting the Obamacare as a “regulation”, the roll back of the oppressive regulations including the EPA, OSHA, FLRB and the DOL are at the top of small business owner lists of concerns. Counting the Obamacare as a “tax”, tax issues account for six of the top ten owner concerns in NFIB’s 2016 Small Business Problems and Priorities survey. The 10th ranked problem was the shortage of “qualified labor”.
Federal Reserve policy might be impacted by the appointment of two new Governors of the Federal Reserve System. This could change the current hawks to doves voting balance on the FOMC. But new nominees must be approved by the Senate, so that is more likely to occur in the second half of 2017. Which of the current Governors choose to remain and serve out their terms remains to be seen. Any departures provide additional opportunities to change the composition of the FOMC which determines monetary policy. In the meantime, the Federal Reserve will raise rates in December.
The question as to whether or not uncertainty, and political uncertainty in particular, matters was clearly answered by the November survey – it does! Owners clearly expect a different, and better from their perspective, set of economic policies to help the economy shed the growing number of obstacles of the last eight years in tax and regulatory policies that have depressed growth. This economy has grown in spite of, not because of, Obama’s economic policies. Population growth explains most, if not all, of our progress. The prospective impact of expected policy changes was translated into very positive views of economic activity which will translate into more spending and hiring if maintained.
Posted: December 13, 2016 Tuesday 07:00 AM