US Small Business Optimism Levels Dipped in June – What Does This Mean?

 In Research

US small business confidence fell in June, as small business owners have expressed frustration over Washington gridlock, according to a National Federation of Independent Business report recently released.

The Federation’s Index of Small Business Optimism fell to 103.6 last month, down from 104.5 in May. This still remains near the highest levels in more than a decade. The surge in optimism followed the election of Donald Trump as US president last November. In January, they hit their highest level since December 2004.

The increase in optimism is largely attributed to Trump’s promises of deregulation, tax breaks, and infrastructure spending. Because of Congress’s inability to deliver on these promises, however, small business owners have grown wary and uncertain. Take tax reform, for example, a major promise expected to benefit small business owners has been overshadowed by the healthcare debate.

Eventually, the negativity would spread beyond just small business – it may impact the economy as a whole. That’s because with fewer small businesses anticipating improved business conditions, plans to increase employment have declined. In May 18% of small business owners planned to expand employment, the highest level since 2006. That fell to 15% in June. Further, 44% of small business owners were hiring or trying to hire in June, compared to 49% in May.

What does all of this mean?

Hiring activity and optimism remain high, historically, but the drop in June is worth note. It may be a non-concerning one-month blip. On the other hand, it may be the start of a downward trend. Only time will tell.

More Resources:

The Values of Millennial Entrepreneurs

2017 Small Business Outlook Report

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