Small business optimism slipped in December by 2.6 percentage points despite Republicans passing the first major overhaul to U.S. tax law in three decades, the National Federation of Independent Business Small Business says in a report released today.
The NFIB Index of Small Business Optimism reached 104.9 last month, slightly lower than the near record high in November.
Still, 2017 was the strongest year on record for small business confidence, which rose after the 2016 election of President Donald Trump. The average monthly index for 2017 was 104.8.
Driving the record optimism last year: the expectation of better economic policies from Washington, D.C., a massive tax cut and the suspension of some business regulations, the NFIB says.
“Small business owners pay close attention to Washington,” says NFIB President and CEO Juanita Duggan in a statement. “Federal policies affect their decisions on whether to hire, whether to invest, whether to grow inventory, and whether to seek capital.”
State-specific data was unavailable, but Dawn Starns, NFIB state director for Louisiana, says the survey shows that small businesses need certainty and predictability.
“You’re not going to expand or add people if you’re worried about taxes and regulations,” Starns says.
Two of the December components posted gains, five declined, and three remained unchanged. Moving the index moderately lower were declines in Expected Better Business Conditions, which fell 11 points and Inventory Plans, which fell 8 points. Small business owners were bedeviled by a labor shortage in 2017 that grew more intense as optimism rose.
