NFIB Weekly News
Leading the News
Small Business Optimism Index Remains Historically High.
NFIB’s Small Business Optimism Index for June was the sixth-highest reading in survey history. The index saw a 0.6-point decrease to 107.2. Despite the slight decline, since December 2016, the Index has averaged 105.4, significantly above the 45-year average of 98 and nearing the all-time high of 108.0 in July 1983. NFIB President and CEO Juanita Duggan said, “Small business owners continue to report astounding optimism as they celebrate strong sales, the creation of jobs, and more profits. The first six months of the year have been very good to small business thanks to tax cuts, regulatory reform, and policies that help them grow.” Chief Economist Bill Dunkelberg said, “There was a fractional decline in the Index from May to June, statistically insignificant. Small business owners are already seeing their bottom lines grow due to strong sales and regulatory relief and the new tax law is expected to push profits higher as the year progresses.”
Trump: Tax Cuts “Unleashed An Economic Miracle.” Business Climate
The AP (6/29) reports President Trump held an event on Friday at the White House to mark the six-month anniversary of his tax cuts. Trump declared, “We are bringing back our beautiful American dreams.” The President said the tax cuts were responsible for an “economic miracle,” but the AP argues “there’s credit to be shared: Lower unemployment, fewer claims for jobless benefits and many other positive economic indicators reflect the slow and steady nine-year recovery that began under President Barack Obama.”
President Trump Addresses NFIB’s 75th Anniversary Luncheon.
Live coverage of President Trump’s address to the 75th anniversary gathering of NFIB in Washington, DC was featured on CNBC, Fox Business, and Fox News. On its website, UPI (6/19, Shayanian) features a video of the speech. The White House (6/19) published a transcript of Trump’s remarks at the NFIB luncheon. During his address, Trump said, “we’re here today to talk about small business and the incredible progress we’re making as a country... And we’re making with the help and support of our wonderful friends at the NFIB.” Trump thanked Small Business Administration head Linda McMahon for her leadership of the SBA and her devotion to helping America’s small business owners. Trump also commended Treasury Secretary Steven Mnuchin and Labor Secretary Alexander Acosta and said that together, McMahon and the other Cabinet members are “fighting hard for small business and for large business. They’re fighting hard for our country, frankly, each and every day. And they’re doing a terrific job.” Trump stated that “according to the NFIB’s latest survey, the share of small businesses raising worker and benefit pay has just set a new all-time record. So it’s a new all-time record.” Toward the end of his address, Trump said, “Every American who owns a small business plays a vital role in creating a safe, strong, and prosperous America. And my administration will never forget that truth.”
Fed Raises Interest Rates By 0.25%.
The New York Times (6/13, Tankersley, Subscription Publication) reports that on Wednesday the Federal Reserve announced a 0.25% increase in interest rates, “and signaled it will raise rates two more times this year.” Making the announcement, Fed Chairman Jerome Powell “proclaimed the United States economy to be in ‘great shape’ and that ‘most people who want to find jobs are finding them.’” According to the Times, Powell “said the economy has strengthened significantly since the financial crisis and is approaching a ‘normal’ level where monetary policy may no longer be needed to either encourage or discourage economic activity,” adding that it “now projects unemployment to fall to 3.6 percent in 2018 and indicated it will raise interest rates a total of four times this year.” In addition, the times adds, “A statement released at the end of the Fed’s two-day meeting took several steps to show officials no longer view the United States economy as needing a boost and are instead beginning to worry more about the threat of inflation.” The Fed also raised its main inflation rate forecast to 2.1% from 1.9%, and it “now predicts inflation will run slightly above its target rate of 2 percent through 2020, at 2.1 percent each year.”
Small Business Optimism Index Continues Historic Highs.
NFIB’s Small Business Optimism Index for May was the second-highest in the 45-year-history of the survey. The index saw a three-point gain, rising to 107.8. Positive earnings trends reached a net three percent, a survey high, and positive sales trends are at their highest level since 1995. NFIB President and CEO Juanita Duggan said, “Main Street optimism is on a stratospheric trajectory thanks to recent tax cuts and regulatory changes. For years, owners have continuously signaled that when taxes and regulations ease, earnings and employee compensation increase.” Chief Economist Bill Dunkelberg said, “Small business owners are continuing an 18-month streak of unprecedented optimism which is leading to more hiring and raising wages. ... While they continue to face challenges in hiring qualified workers, they now have more resources to commit to attracting candidates.”
US Economy Added 223,000 Jobs In May.
Under the headline, “US Unemployment Falls Nearly To 1969 Levels; Hiring Is Solid,” the AP (6/1, Rugaber) said the Labor Department’s May jobs report “shows that the nearly 9-year-old economic expansion – the second-longest on record – remains on track and may even be gaining steam.” The Washington Post (6/1, Long) stated that US employers “added 223,000 job in May” as the unemployment rate fell to its lowest level since 2000, which exceeded “the 200,000 that had been expected.” The New York Times (6/1, Schwartz, Subscription Publication) reported “it was the 92nd consecutive month of job creation,” and “most economists expect the momentum to continue.” The Times also noted that “average hourly earnings rose slightly, lifting the year-on-year gain to 2.7 percent.”
More Workers Leaving Their Jobs For Higher Pay, More Satisfying Work.
The Wall Street Journal (7/4, Harrison, Morath, Subscription Publication) reports in a front-page story that workers are leaving their jobs at the fastest rate since the Internet boom and they are landing higher pay and more satisfying work as a result. According to the Labor Department, 3.4 million Americans quit their jobs in April. The Journal says they are emboldened by the strong economy and low unemployment.
Report: 36% Of US Businesses Had Unfilled Jobs In June, Tied For Highest Amount Since 1973. Small Business Marketing
Bloomberg News (7/5, Kearns) reported that a NFIB report from released Thursday shows that “the share of US firms with open positions rose to 36 percent in June, matching November 2000 as the highest in monthly records back to 1973,” while, “twenty-one percent of small-business owners said finding qualified workers was their biggest problem, also near a record level, according to the group’s survey of member firms through June 29.” According to Bloomberg, “Hiring qualified people in a tightening labor market is getting to be an even bigger headache for smaller US companies, who’ve been fattening paychecks to lure skilled workers.” The article quotes the NFIB report on the economic impact of the lack of skilled workers, saying, “The availability of qualified workers is impeding the growth in employment. Absent significant increases in the size of the labor force through a higher participation rate, owners will increasingly be pirating workers from other firms rather than new entrants in the labor force. There will also be compromises in qualifications and more resources invested in training, both new employees and existing workers.”
DOL: Rising Labor Force Participation Drove Unemployment Rate Up To 4 Percent In June.
The Labor Department released its June jobs report Friday morning. The Wall Street Journal (7/6, A1, Morath, Subscription Publication) reported that employers added 213,000 jobs last month, but the unemployment rate rose to 4.0 percent from 3.8 percent in May, as an increasing number of Americans who were once out of the labor force have begun searching for jobs. Average hourly wages for private-sector workers rose 2.7 percent YoY to $26.98. Reuters (7/6, Joyner) reported that job growth beat “expectations of 195,000.”
Media Analyses: SCOTUS Ruling On Union Dues Major Defeat For Labor, Democrats.
Media reports are casting last week’s Supreme Court ruling in Janus vs. AFSCME as a major defeat for labor unions and the Democratic Party. President Trump hailed the 5-4 decision on Twitter, writing, “Supreme Court rules in favor of non-union workers who are now, as an example, able to support a candidate of his or her choice without having those who control the Union deciding for them. Big loss for the coffers of the Democrats!” The Washington Post (6/27, Barnes) said the ruling “was a devastating, if not unexpected, loss for public employee unions, the most vital component of organized labor and a major player in Democratic Party politics.” The AP (6/27, Sherman) reported the ruling “was no surprise” and was “merely delayed by the unexpected death of Justice Antonin Scalia in 2016,” as “the court split 4-4, after” his death “when it considered the same issue in 2016.” The AP added that “when Trump was elected, opponents of the fees hurried a case back to the court,” and “fearing what would happen, unions strongly opposed [Justice Neil] Gorsuch’s nomination to the high court.”
Draft Bill Ordered By Trump Would Declare US Abandonment Of WTO Rules.
Jonathan Swan writes on Axios (7/1) that the site “has obtained a leaked draft of a Trump administration bill – ordered by the president himself – that would declare America’s abandonment of fundamental World Trade Organization rules.” The “stunning” draft “essentially provides Trump a license to raise US tariffs at will, without congressional consent and international rules be damned.” A source familiar with the bill said, “It would be the equivalent of walking away from the WTO and our commitments there without us actually notifying our withdrawal,” The source who described the bill as “insane,” said, “The good news is Congress would never give this authority to the president.”
Trump Says He’ll Delay Signing NAFTA Deal Until After Midterms.
The AP (7/1, Thomas) reports that in an interview that aired on Fox News’ Sunday Morning Futures (7/1), President Trump said he “intends to delay signing a revised version of the North American Free Trade Agreement until after the fall midterm elections, a move aimed at reaching a better deal with Canada and Mexico.” Trump said “that he could quickly sign an agreement with the United States’ neighbors,” but, “I’m not happy with it. I want to make it more fair. ... I want to wait until after the election.” Trump “again threatened to impose tariffs on imported cars, trucks and auto parts,” saying, “The cars are the big ones.” The Wall Street Journal (7/1, Schlesinger, Subscription Publication) says Trump views the threat to impose auto tariffs as his greatest leverage to win concessions from trading partners.
Amazon Delivery Service Partners Program Is An Opportunity For Small Businesses.
Small Business Trends (7/5, Guta) reports Amazon is looking to outsource package delivery as demand grows, leading to its Delivery Service Partners program. The program “offers an opportunity for small businesses to be part of one of the most successful ecommerce companies in the world by launching their own delivery service. Amazon is looking for hundreds of entrepreneurs to join the venture.” The program “starts with a three-week comprehensive training. From the time you start your application until you get your business up and running could take anywhere from one to six months, Amazon says.” Amazon SVP of Worldwide Operations Dave Clark said in a press release, “Customer demand is higher than ever and we have a need to build more capacity. As we evaluated how to support our growth, we went back to our roots to share the opportunity with small-and-medium-sized businesses.”
Opinion: Economic Environment Favorable For Small Businesses. Wages and Benefits
Rohit Arora writes in Inc. Magazine (7/5) that the US economy is performing well “in part, because small businesses are creating jobs.” Increasing numbers “of the small and medium-sized businesses looking to expand their operations are finding success in securing capital both from traditional banks and from non-bank lenders, including institutional investors.” Big banks “typically the most conservative lenders, are granting more than a quarter (25.9%) of the loan applications they receive,” while “regional and community banks, which process many SBA loans, are approving nearly half (49.4%) of their funding requests, the highest figure for small banks in three years.” Arora says that small businesses can take advantage of the current economic environment by applying for loans now, investing in making their websites more mobile friendly, and putting more time into branding.
Capital One’s Andrea Raj Highlights “6 Best Practices To Get Your Finances On Track” For Small Businesses.
In a piece for SmallBizTechnology (7/5), Andrea Raj, director of Small Business Bank Strategy at Capital One, says the “most important step for managing your money is to remain organized and think through the different factors that can both positively and negatively impact your cashflow, including saving, maximizing rewards, hiring and taking advantage of tax benefits.” Raj outlines the “6 Best Practices to Get Your Finances on Track,” providing “dos and don’ts,” highlighting everything from savings and credit cards, to tax cuts and hiring practices. Raj explains, “The more you understand your business finances, the better prepared you’ll be to make smart money management decisions.”
Small Businesses Seen As Vulnerable To State-Backed Hackers.
MeriTalk (6/27) reports that a House Small Business Committee hearing discussed how small businesses “have become top targets for nefarious state-backed actors because they tend to be the softest targets,” in the words of committee chairman Steve Chabot. Chabot adds, “They have fewer resources to manage their information technology systems and respond to cybersecurity incidents and they often lack the technical knowledge needed to assess the ever-evolving threats.”
Advice Offered On How Businesses Can Weather A Summer Slowdown.
David Kiger writes in a blog post for Business 2 Community (6/27) that for some small business owners, summer can mean “a slowdown in sales and productivity,” but “there are ways to combat these downturns, and to make the most of revenue opportunities and planning for the months ahead.” In a recent blog post for the Small Business Administration, Caron Beesley suggested that small business owners could offer special promotions to attract more customers during the summer. “Many people have more flexible schedules during the summer months. Consider ways to draw people in during your off-peak hours, whether it’s a time-bound discount or another incentive,” she wrote. Or, “offer a discount if customers buy more than one product or service. For example, buy a coffee and a donut for $3.50 instead of $5.”
National Law Review Discusses Common Securities For Small Business Financing.
In a piece reviewing the most common types of securities used in financing emerging companies, National Law Review (6/26) writes that “founders who want funding but wish to avoid diluting their stake in the company” should consider conventional debt. This type of security, which typically has “more flexible requirements for qualification,” includes “equipment loans, business credit cards, microloans of very small amounts, and loans from the Small Business Administration (SBA).” The article also discusses government and institutional grants, namely the Small Business Innovation Research (SBIR) grants and Small Business Technology Transfer (STTR) grants, both of which are coordinated by the SBA.
Wages Rising For Blue-Collar Jobs.
Breitbart (7/3, Munro) reports that the recruitment and wage-tracking company Glassdoor says “wages in a variety of blue-collar jobs” are rising due to labor shortages. A statement from the company said, “With the economy running hot, we’re finally starting to see pay raises for many of America’s lowest-paying jobs.”
Some Restaurants Raising Prices To Offset Increased Labor Costs, Reduced Foot Traffic.
Bloomberg News (7/3) reports as “minimum wage increases take hold across the US...restaurants may be among the hardest-hit businesses,” and “reduced foot traffic, a worker shortage, and the rising labor costs could mean higher bills for that slowing trickle of diners.” Starbucks, for instance, “recently bumped up the price of a drip coffee by 10 to 20 cents.”
NYTimes: Administration Seeks To Stigmatize Medicaid Through Work Requirements.
The New York Times (7/7) editorializes that the “arguments underpinning” Medicaid work requirements “are fatally flawed.” The Times argues that “a clear majority of Medicaid recipients who can work already do work,” and the “vast majority” of those that do not “have physical limitations or provide full-time care to young or elderly family members.” The Times suggests the Trump Administration’s “push to enact work requirements is aimed not at improving health, or even at cutting costs...but rather at stigmatizing Medicaid,” and calls on the Supreme Court to “see through the conservative myths about Medicaid and do right by the program’s recipients.”
Goodman: Some ACA Plans Are More Limited Than Medicaid.
In an op-ed for the Wall Street Journal (6/26, Subscription Publication), John C. Goodman, president of the Goodman Institute for Public Policy Research, that while the elimination of the ACA’s individual mandate is a positive development, there has been no change on the supply side of the health insurance market and unless more reforms are made to the law’s limits on insurers, many Americans will have to select from a limited group of plans, some of which are more restrictive than Medicaid.
WPost Analysis: States Move To Fill Gaps Washington Is Creating In ACA.
The Washington Post (7/1, Goldstein) reports on “a nascent movement with states stepping out on their own to counteract Washington’s efforts to erode the ACA.” A New Jersey law requiring “most residents to carry insurance” and a similar measure in Washington, DC, “are timed to begin in January, when a federal penalty is scheduled to disappear for Americans who violate the mandate built into the health-care law.” Moreover, “several states are erecting barriers against rules the Trump administration is writing to promote short-term health plans that are comparatively inexpensive because they lack benefits and consumer protections guaranteed by the ACA,” and some states “are trying to slow insurance rate increases through methods that Congress considered but did not pass.” The Post says “the moves mean the nation is starting to revert to the insurance landscape of a decade ago – a hodgepodge that created the political pressures that culminated in the sweeping 2010 law.”
Increases In ACA Plan Premiums Could Hurt Republicans In Midterms.
Politico (6/24, Demko) reported premiums for exchange plans are expected to increase “by double digits in 2019, causing heartburn for politicians as voters will head to the polls within days of learning about the looming hit to their pocketbooks.” However, the article pointed out that “unlike recent campaign cycles, when Republicans capitalized on Obamacare sticker shock to help propel them to complete control of Congress and the White House, they’re now likely to be the ones feeling the wrath of voters.”