How do Small Business Owners Feel About the 2018 Economy?
Every owner of a small business deals with problems day in and day out, but not all problems are equal. Idaho’s May unemployment rate continued to hover at 2.9%, almost a point below the national average. Many businesses are having trouble filling job openings, but it’s much better to have more work than your employees can handle than to worry about laying off workers.
Small Business Optimism Soaring
According to research, in 2016 small business owners strongly preferred Trump over his democratic rival Hillary Clinton as their choice for president, but they weren’t overly impressed with either candidate. Now, small business all over the country are very optimistic about the changes that Trump’s administration has been making economically. The president’s tax cuts have been a boon to businesses all over the country and have resulted in significant increases in employment and wage growth. In May, the Small Business Optimism Index hit the second highest level seen in the past 45 years, almost breaking the record high. The National Federation of Independent Business (NFIB) is reporting positive and record-setting earnings trends. As a result, many entrepreneurs are either seriously considering or making firm plans to expand their businesses.
Easing regulations that have put what many considered an unfair burden on small businesses has also been significant. Some industries have been helped more than others, but every small business owner appreciates less paperwork and fewer bureaucratic regulations.
Wage and Earning Increases
Idaho has done exceptionally well under the Trump presidency. The Bureau of Economic Analysis attributes Idaho’s remarkable earnings growth, the best of any state, to Idaho’s healthy 9.7% increase in earnings from the manufacturing of durable goods.
The booming economy and low unemployment rate are intrinsically linked to higher compensation for workers. Across the U.S., workers saw bigger paychecks thanks to the tax increases and, as the unemployment rate remained low, pay increases.
Idaho’s historically low per capita income, ranked 44th in 2014, helped set the stage for wage increases in local businesses. A relatively small population of fewer than 1.8 million people contributed to worker demand and the need for higher compensation.
When consumers are happy, business owners are happy. Discretionary spending goes up. People begin to buy big ticket items and spend on delayed projects such as home improvements. Businesses invest in new equipment. A look at the Consumer Sentiment Index shows a consistent upward trend.
For years, business owners had been saying that lowering taxes and removing burdensome regulations would trigger increases in both earnings and wages. Main Street knows how it works far better than most politicians. President Trump was uniquely qualified to understand what the economic engine needs, having spent his life building an enormously successful business. There’s always more work to be done, but small business owners should feel confident about the future and make plans to grow their operations.