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US small-business optimism extended its surge in December to the highest level since October 2018, buoyed by expectations of favorable policies under President-elect Donald Trump.
Author of the article:
Bloomberg News
Nazmul Ahasan
Published Jan 14, 2025 • 1 minute read
(Bloomberg) — US small-business optimism extended its surge in December to the highest level since October 2018, buoyed by expectations of favorable policies under President-elect Donald Trump.
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The National Federation of Independent Business optimism index rose 3.4 points last month to 105.1, following the sharpest monthly increase on record in November. Seven of the 10 index components improved, led by a 16-point jump in the net share of businesses expecting better business conditions — bringing that measure to the highest in monthly data since 2002.
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Meanwhile, the group’s uncertainty indicator dropped another 12 points — amounting to the biggest back-to-back decline on record — given increased clarity on the economic path following the presidential election and Republicans’ sweep of Congress.
“Optimism on Main Street continues to grow with the improved economic outlook following the election,” NFIB Chief Economist Bill Dunkelberg said in a statement. “Small business owners feel more certain and hopeful about the economic agenda of the new administration.”
Sales expectations also strengthened: the share of respondents anticipating higher sales climbed 8 points to the highest level since January 2020. Businesses were more keen to expand as well due to the political climate.
While owners still rate inflation as their most important issue, recent and planned price changes appear to be stabilizing at somewhat-elevated levels. Government data due Wednesday is expected to show consumer prices excluding food and energy continued to grow at a firm pace in December, underscoring the Federal Reserve’s preference to keep interest rates on hold for now.
Issues around labor quality are also steadying, particularly around businesses’ difficulty finding qualified applicants and inability to fill open positions.
The share of businesses expecting harder credit conditions in the next three months eased to the smallest share since February 2020. However, the surge in bond yields to kick off 2025 may challenge that notion in next month’s survey.
Findings of the NFIB survey were based on 513 responses out of a sample of 5,000 owners — putting the response rate at 10.3%.
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English (US)