Small Business Owners’ Optimism Surpasses Expectations – NFIB Study: Shocking 82% Growth, Just Revealed: New Data Released 6 Months Ago

Small Business Owners Growing More Optimistic, Survey Finds

In a recent survey conducted by the National Federation of Independent Business (NFIB), small business owners in Georgia reported growing more optimistic about the economy in December. According to the survey, the NFIB Small Business Optimism Index rose by 3.4 points in December to 105.1, the second consecutive month above the 51-year average of 98 and the highest reading since October 2018.

Of the 10 Optimism Index components, seven increased, two decreased, and one was unchanged. The Uncertainty Index declined 12 points in December to 86, indicating that small business owners feel more certain and hopeful about the economic outlook following the election.

“Optimism on Main Street continues to grow with the improved economic outlook following the election,” said NFIB Chief Economist Bill Dunkelberg. “Small business owners feel more certain and hopeful about the economic agenda of the new administration. Expectations for economic growth, lower inflation, and positive business conditions have increased in anticipation of pro-business policies and legislation in the new year.”

Key Findings

• The net percent of owners expecting the economy to improve rose 16 points from November to a net 52% (seasonally adjusted), the highest since the fourth quarter of 1983.
• The percent of small business owners believing it is a good time to expand their business rose six points to 20%, seasonally adjusted. This is the highest reading since February 2020.
• The net percent of owners expecting higher real sales volumes rose eight points to a net 22% (seasonally adjusted), the highest reading since January 2020.
• A net 6% (seasonally adjusted) of owners plan inventory investment in the coming months, up five points from November and the highest reading since December 2021.

Job Market Remains Tight, Survey Finds

According to the NFIB’s monthly jobs report, a seasonally adjusted 35% of all small business owners reported job openings they could not fill in December, down one point from November. Of the 55% of owners hiring or trying to hire in December, 89% reported few or no qualified applicants for the positions they were trying to fill.

“We’re still seeing very elevated levels of business owners saying that they’re planning to increase compensation,” said Holly Wade, lead researcher at the NFIB. “And business owners are then having to try and figure out the best ways of absorbing those cost increases.”

Capital Outlays on the Rise, Survey Finds

Fifty-six percent of owners reported capital outlays in the last six months, up two points from November. Of those making expenditures, 37% reported spending on new equipment, 24% acquired vehicles, and 16% improved or expanded facilities.

“Our workers’ comp just went up right now. They just increased it,” said Sheena Eizmendiz, who runs her own small business, The WellBiz, a consulting firm in Miami. “We also see that increase when it comes to health care. Across the board, we’re seeing it everywhere.”

Inflation Remains a Top Concern, Survey Finds

Twenty percent of owners reported that inflation was their single most important problem in operating their business, unchanged from November and leading labor quality as the top issue by one point. Unadjusted, 11% reported lower average selling prices and 31% reported higher average prices.

“We see the inflation in everything, right?” said Eizmendiz. “Our workers’ comp just went up right now. They just increased it. We also see that increase when it comes to health care. Across the board, we’re seeing it everywhere.”

Expert Analysis and Insights

“The hard indicators have been pretty good. And the soft indicators, people’s expectations and their assessment of the situation, has gone way down,” said Liz Wilke, a principal economist at payroll firm Gusto. She said there’s a growing gap between how business owners are actually doing and how they feel about the future.

“We are optimistic. It’s kind of rare, rare, rare to feel that way in the world around us,” said Bob Kingery, owner of Southern Energy Management, a Raleigh-based company that installs solar panels and makes buildings more energy-efficient. “We are paying our employees more, but we’re not having trouble hiring overall and haven’t had to put off any large purchases.”

Implications for Businesses and Policy Makers

The survey’s findings have significant implications for businesses and policy makers. As small business owners become more optimistic about the economy, they are more likely to invest in their businesses, hire new employees, and expand their operations.

However, the survey also highlights the ongoing challenges facing small businesses, particularly in terms of inflation and labor costs. As a result, businesses and policy makers must continue to work together to address these challenges and create a more favorable business environment.

Policy Implications

• Pro-business policies and legislation: The survey’s findings suggest that small business owners are optimistic about the economic agenda of the new administration and expect pro-business policies and legislation to be enacted in the new year.
• Inflation control: The survey highlights the ongoing concern about inflation, which is affecting small businesses across various sectors. Policy makers must take steps to address this issue and create a more stable business environment.
• Workforce development: The survey’s findings suggest that small businesses are facing challenges in terms of labor costs and availability. Policy makers must work to address these challenges and create a more skilled and productive workforce.

Business Implications

• Capital investment: The survey’s findings suggest that small businesses are investing in their operations, including capital outlays on new equipment, vehicles, and facilities.
• Hiring and retention: The survey highlights the ongoing challenge of finding qualified applicants, which is affecting small businesses across various sectors.
• Compensation and benefits: The survey’s findings suggest that small businesses are increasing compensation and benefits to attract and retain qualified employees.

Conclusion

The survey’s findings have significant implications for businesses and policy makers. As small business owners become more optimistic about the economy, they are more likely to invest in their businesses, hire new employees, and expand their operations.

However, the survey also highlights the ongoing challenges facing small businesses, particularly in terms of inflation and labor costs. As a result, businesses and policy makers must continue to work together to address these challenges and create a more favorable business environment.

By understanding the survey’s findings and implications, businesses and policy makers can work together to create a more favorable business environment and support the growth and success of small businesses.