More small-business owners last month said they expect higher sales and think that now is a good time to expand, according to the October NFIB Index of Small Business Optimism, released Tuesday.
“Owners became much more positive about the economic environment last month, which suggests a longer-run view,” said NFIB Chief Economist Bill Dunkelberg.
“In the nearer term, they are more optimistic about real sales growth and improved business conditions through the end of the year.”
The October Index rose to 103.8, up from 103 the previous month. The historically strong performance extends the streak of positive months dating back to last November, when it shot up immediately following the election.
Four of the Index components rose last month. Five declined slightly, while one remained unchanged. Outlook for expansion and sales expectations each jumped six points, while job openings increased by five points.
The tight labor market got tighter for small business owners last month, continuing a year-long trend. Fifty-nine percent of owners said they tried to hire in October, with 88 percent of them reporting no or few qualified applicants. Hiring activity was particularly high in Florida and Georgia, as construction firms are still trying to meet higher demand caused by the recent hurricane.
“Consumer sentiment surged based on optimism about jobs and incomes, an encouraging development as consumers account for 70 percent of GDP,” said Dunkelberg. “We expect a pickup in auto spending as people in Texas and Florida continue to replace cars that were damaged in the hurricanes. We expect the same increase in home improvement spending, partly because of the hurricanes, but also because of the skyrocketing price of homes.”
And while small-business optimism is robust now, the Los Angeles Times warns that mom-and-pop shop owners could soon be in for a rude awakening via the Trump-Republican tax-reform plans.
"Take for instance their proposals to reward “pass-through” income with special discounted tax rates," the Times recently explained.
"Certain kinds of businesses — partnerships and “S” corporations — are allowed to “pass through” their profits to their owners, who then report the revenue as personal income and pay tax accordingly. The upper rate used to be the top individual rate, 39.6%. Under the House plan, the pass-through maximum rate would drop to 25% for qualifying owners. The Senate is less generous, but still would offer a rate no greater than 32%. Either way, it sounds like welcome tax relief for hardworking entrepreneurs, right? Actually, the proposals plant a massive kiss on the mugs of the idle rich," the Times explained.
"Congress wants us to believe that lowering the pass-through tax rate would grow America’s small businesses by encouraging entrepreneurial risk-taking and new hiring. The House press release crows about providing “Main Street job creators” with “the lowest tax rate on small business income since World War II.”
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