Main Street is borderline euphoric about the election of Donald Trump, with small business owners registering levels optimism not seen in nearly a year. The confidence boost comes from expectations of sales gains and improvement in small business owners' outlook for business conditions, according to a report released Tuesday by the conservative lobbying group the National Federation of Independent Business.
The NFIB's optimism index measured confidence pre-and post-election for the first time ever, and it showed a significant jump after the polls closed. The NFIB's historical average is 98, out of a possible 110, and confidence had been fairly stagnant for the past year, coming in at 94.9 in October. Before the election optimism had risen only half a point, to 95.4.
Then, post-election responses led the index to climb to 102.4. Averaged for the month, November's optimism reading came in at 98.4, the second-highest rating since 2011 and among the largest month-over-month increases in that same time period.
"The people responding in the second half of the month obviously had their uncertainty reduced quite a bit," says NFIB Chief Economist Bill Dunkelberg. "Now, there is still a big uncertainty remaining in that the management team has changed. We know a bit about their philosophy, but what will they do?"
NFIB President and CEO Juanita Duggan attributes business owners' good mood to the fact that Republicans kept control of both the House and Senate, and to the expectation that tax reform and deregulation are on the way.
"We think this is directly related to policy — small business owners are expecting the House and Senate to accomplish massive tax reform, deregulation, and to do something about Obamacare," Duggan says. "Those are the top three issues in every survey we take, so this is policy-driven, in our opinion."
In this month's survey, eight of the ten index components posted gains, but expectations for real sales gains and overall outlook for business conditions accounted for 69 percent of the increase seen in November. The improvement in earnings projections seen post-election was among the strongest readings since 2005. The NFIB polled 724 respondents for the month.
It remains to be seen how the President-elect and his administration will handle major campaign promises, from an overhaul of the tax system to a repeal of the Affordable Care Act. Throughout the campaign, polls among small business owners showed support for Trump, even though his plans to boost small business were less detailed than those of his Democratic opponent Hillary Clinton.
"I think the tax reform message and endorsing parity for small and large businesses is something that came through loud and clear for our membership," Duggan says. "The deregulation message is also strong, and he hasn't budged on those two issues yet."
"People supported Trump based on the flavor and philosophy of the team, not because he had very specific policies," Dunkelberg adds.
It remains to be seen if the post-election bump in optimism holds in the months to come, but Dunkelberg is predicting "more or less" that the numbers will remain high.
"It will all depend on follow-through and if the President-elect and Congress can work together to produce changes that our members want," Duggan says.