As states and counties around the US continue to reopen following the coronavirus lockdowns, optimism among small businesses is skyrocketing, signaling continued positive turnaround for the economy.
This is a big indicator of the continued V-shaped recovery President Trump has talked about, as small businesses are the backbone of the economy with 30.7 million small businesses in the U.S.
So, when small businesses do well, everyone does well.
According to the National Federation of Independent Business’s September report, US small business confidence reached its highest level since when coronavirus concerns took root in February.
The NFIB Optimism index rose 3.8 points to 104.0 in September, which the organization describes as “a historically high reading.” Nine of the 10 Index components improved while just one declined.
The 9 index categories that saw an increase are plans to increase employment, plans to make capital outlays, plans to increase inventories, expect the economy to improve, expect real sales higher, current inventory, current job openings, now a good time to expand, and earnings trends.
The single category that saw a decrease is expected credit conditions.
Other notable findings of the NFIB’s September report include:
- Earnings trends over the past 3 months improved 13 points to a net negative 12% reporting higher earnings.
- Owners expecting better business conditions over the next 6 months improved 8 points to a net 32%.
- Real sales expectations in the next 3 months increased 5 points to a net 8%.
- Inventory investment plans over the next 3 to 6 months increased by 5 points to a net 11%.
- The percent of owners thinking it’s a good time to expand increased 1 point to 13%.
NFIB Chief Economist Bill Dunkelberg commented on the report stating, “As parts of the country continue to open, small businesses are seeing some improvements in foot traffic and sales.”
“However, some small businesses are still struggling financially to operate at full capacity while navigating state and local regulations and are uncertain about what will happen in the future,” he continued.
While optimism is up and conditions are generally improving, job growth continues at a slower rate.
This trend is largely in part to local re-opening efforts stagnating, particularly in Democrat-run states, as the presidential election approaches. Owners of small businesses are likely waiting to see who wins the election before they begin expanding their staff beyond what is necessary for operations.
If Biden wins and shuts down the country for a second time (which he’s expressed a willingness to do several times), we could sink into an economic depression. If Trump wins and reopening continues, we will continue to recover and return to a great economy.