USA Risk Climate: Optimism among Small Business Owners Highest in over a Decade

Notwithstanding the concern expressed by the G20 and B20 Forums about the general lack of prosperity of SMEs, the news from the United States is encouraging as reported by the National Association of Credit Management (NACM).

Expectations for better business conditions among small business owners are at their highest since 2004, according to the National Federation of Independent Businesses’ (NFIB) December Index of Small Business Optimism, which rose 7.4 points to 105.8. Seven of the 10 index components posted a gain. The number of owners who expect better business conditions experienced a “stratospheric” 38-point jump.

“We haven’t seen numbers like this in a long time,” said NFIB President and CEO Juanita Duggan. “Small business is ready for a breakout, and that can only mean very good things for the U.S. economy.”

“Business owners who expect better business conditions accounted for 48% of the overall increase,” said NFIB Chief Economist Bill Dunkelberg. “The December results confirm the sharp increase that we reported immediately after the [U.S. presidential] election.”

The December survey reflected the optimism of the postelection November survey, which jumped seven points to 102.4 after the results of the U.S. presidential election were announced.

Expectations for real sales gains and the outlook for business conditions contributed 73% of the gain in the index. The percent of owners viewing the current period as a good time to expand is now triple the average level in the recovery, NFIB said. Capital spending showed gains, both in reported outlays and plans for spending. Job-creation plans are at their highest levels since 2007.

“Business owners are feeling better about taking risks and making investments,” Duggan said. “Optimism is the main ingredient for economic expansion. We’ll be watching this trend carefully over the next few months.”