June 2017 Small Business Optimism

Washington D. C. seems to have a lot of influence on the way business owners feel. Small Business Optimism, as measured by the National Federation of Independent Business (NFIB), jumped immediately after the presidential election. Since then, it has given back some of the gain and continued to do so in June as their index reached 103.9, dropping 2.9 points and reaching the lowest tally of this year. The NFIB blames this most recent decline on gridlock within the Senate’s healthcare reform. Whatever the cause, optimism is no longer increasing.

Five of the ten categories fell in June, while four improved and one was unchanged. Their outlook on the economy dropped the most, falling six percent. This dourer forecast could weigh down hiring going forward as the two categories covering jobs dropped also. Expectations for real sales were lower, and fewer believe expanding now is a good idea.

At least it wasn’t all bad news. Plans to increase capital outlays improved. Investment has been relatively light since after the Great Recession, so any plans for spending on equipment are welcome. Also, more small business owners are going to increase their supplies as a growing number felt they are keeping too little on their shelves. Credit conditions are expected to continue improving, but earnings were unchanged.

According to the NFIB, Washington D. C. is failing this segment of its constituency. Small businesses are anxious to see some resolution on important items like regulatory relief, tax reforms, and the aforementioned healthcare. This group’s optimism soared in November, but their ability to remain enthusiastic is waning. Perhaps Congress will hear from small businesses during their recess and come back to the beltway with a renewed desire to work things out.