Small-business confidence hits record high in 2018 after Trump tax-reform win

Written on Feb 28, 2018

Small-business confidence is surging in 2018 as optimism rises among small-business owners about the newly enacted tax-reform package, according to the latest CNBC/SurveyMonkey Small Business Survey, released Feb. 20.

The CNBC/SurveyMonkey Q1 Small Business Confidence Index saw an increase of five points, from 57 to 62, a record high and the largest quarter-to-quarter move the index has seen since CNBC and SurveyMonkey began measuring last year. This is the first survey since President Donald Trump signed the Tax Cuts and Jobs Act into law in December 2017.

In the Q4 survey, small-business owners were split evenly on the core question about the effect that tax policy would have on their business. Opinions have shifted significantly: Twice as many now expect changes in tax policy to have a positive rather than negative effect on their businesses. Forty-six percent of those surveyed say tax policy changes will have a positive effect, up from 38% in the fourth quarter. The number of those saying tax policy changes will have a negative impact fell sharply, from 36% in the fourth quarter to 23% in the most recent survey.

Confidence rose among almost all demographic groups, with the largest increases coming from companies with five to nine employees, and small-business owners ages 35–44 and 55–64.

The data underscores other polling from advocacy groups, including the conservative lobbying group the National Federation of Independent Business. Its latest monthly optimism report for January 2018 showed the second-highest level of sentiment since Trump took office. The report also had its highest yearly average ever in 2017.

The National Small Business Association, a nonpartisan lobbying group, also recently released its Year-End Economic Report for 2017, which found that more than half of small-business owners feel the national economy is doing better than it was just six months ago. This is compared to 43% who reported the same in December 2016, and only 20% in December 2015. In addition, 59% said they anticipate economic expansion in the next year, and more than one-third of small-business owners said they felt very confident about the future of their own business, the highest level in more than a decade.

Despite the optimistic outlook, challenges remain on Main Street. Small-business owners are looking to Washington for progress on additional issues, including health-care reform. CNBC and SurveyMonkey found that 30% of business owners say they want Congress to tackle health care, with 2 in 10 now reporting the cost of employee health care as the most critical issue facing their business. The NSBA's data also found the cost of health insurance to be the most significant challenge to the future growth and survival of small firms.

Another key area of concern for small businesses is finding skilled labor. In the NFIB's data, the quality of labor is now the top issue. Hiring is challenging, and more businesses are raising wages in order to hang on to the workers they have. The NFIB reports worker compensation is at its highest level since 2000.

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