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Small businesses are pumped about the economy.
The Q1 Metlife & U.S. Chamber of Commerce Small Business Index shows a surge in confidence, moving up more than three points to 66.3.
It’s the biggest jump in the Index since it was launched in 2017.
The Index found a big leap in small business optimism towards the national economy—up 17 percentage points (55% vs. 38%) since Q4 2017. For the first time, the Index shows small businesses are more confident in the national economy than their local economies (46%).
A lot of this increased economic confidence could be due to last December’s tax reform, which small businesses love:
- 54% think it will help the national economy.
- 47% think it will help their business grow, versus 23% who think it will hurt.
The Tax Cuts and Jobs Act cut taxes on businesses of all sizes and forms to spur investment, innovation, and boost economic growth and wages.
In response, companies—including small businesses—are taking advantage of the improved tax environment.
“The 20% discount on taxation of S-corp pass-through income will allow us to keep more money in the business, which will then in turn allow us to invest in more machinery and warehouses,” Doug Renfro President of Renfro Foods in Fort Worth, TX, told Above the Fold. “Ultimately, also, the ability to have increased profits will allow us to continue to provide outstanding benefits for our employees and their families, despite ever-rising health insurance costs.”
Renfro Foods isn’t alone. Ever since tax reform became law last December, companies all across the country have announced employee bonuses, new plant and equipment investments, and donations to local community institutions.
Some other observations:
- 90% of small businesses expect a good year in 2018.
- Nearly one-third (32%) plan to hire more workers this quarter. That's up from 27% in Q4 2017.
- 39% plan to invest profits in their business. Much of that will go to higher employees' pay, investing in training, and hiring more workers.
“The optimism of our nation’s small businesses illustrates how much of a home run passing pro-growth tax reform has already been for U.S. workers, job creators, and the economy,” said Neil Bradley, U.S. Chamber executive vice president and chief policy officer. “National policies like regulatory relief and tax reform are giving small businesses new hope and a greater ability to invest in their business and workers, which translates into positive growth at the community and national level.”