There has been a lot of hopeful talk that the current economic growth will continue in a way similar to what the country experienced during and immediately after the Reagan years.
While it’s far too early to be making those comparisons, the National Federation of Independent Business (NFIB) Index of Small Business Optimism hit “Reaganesque” levels in November, reaching a near-record 107.5.
“We haven’t seen this kind of optimism in 34 years, and we’ve seen it only once in the 44 years that NFIB has been conducting this research,” NFIB President and CEO Juanita Duggan said at the release of the latest figures. “Small business owners are exuberant about the economy, and they are ready to lead the U.S. economy in a period of robust growth.”
October was a great month for the index – it almost set a record then – but it gained another 3.7 points in November. Eight of the 10 index components posted gains, including a stunning and rare 16-point gain in Expected Better Business Conditions and a 13-point jump in Sales Expectations.
These two components are critical because today’s expectations pave the road to tomorrow’s reality. A fact every administration and business leader needs to accept is that psychology, in large part, drives the direction of the economy. When consumers and business leaders fear bad times, they become cautious and tend to pull back on spending. When they see better times ahead, they loosen the purse strings. The fear of worse times causes worse times; the promise of better times causes better times. In macroeconomics, prophecies are usually self-fulfilling.
Another key component worth noting is Job Creation plans. This figure was up six points in November, showing that even more small business owners are going to be in hiring mode. We have long noted the difficulty of finding qualified candidates; the competition will only intensify in coming months. It will be interesting to see what kind of wage growth this causes – so far it hasn’t been as much as one might expect.
Given the stiff competition for talent, it would be a good time to bolster your training program. Hiring and then training up to meet your requirements is a powerful way to get the skills you need and build exceptional company loyalty at the same time.
Plans to increase inventory also went up in November and this should have a strong ripple effect through the economy. If you’re B2B, this should be excellent news and if your optimism has been lagging, it’s time to get with the program.
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Here are all the stats: