Small business optimism jumped in November, surpassing the 50-year average for the first time in nearly three years, according to the National Federation of Independent Business (NFIB).
The Small Business Optimism Index rose eight points to 101.7 last month. The reading, which is the index’s highest since June 2021, follows 34 months of below-average numbers.
“The election results signal a major shift in economic policy, leading to a surge in optimism among small business owners,” Bill Dunkelberg, NFIB’s chief economist, said in a statement.
Small business owners’ level of uncertainty also eased slightly in November, after spiking in recent months. NFIB’s Uncertainty Index fell from a record high of 101 in October to 98 in November.
The net percent of owners who expect the economy to improve surged 41 points, while the portion who believe it’s a good time to expand their business rose 8 points. The share who expect higher real sales volume also ticked up 18 points.
“Main Street also became more certain about future business conditions following the election, breaking a nearly three-year streak of record high uncertainty,” Dunkelberg said.
“Owners are particularly hopeful for tax and regulation policies that favor strong economic growth as well as relief from inflationary pressures,” he added.
President-elect Trump is widely expected to renew or expand several provisions of the Tax Cuts and Jobs Act (TCJA), passed during his first term in office, with help from Republican majorities in both chambers of Congress.
The incoming administration is also expected to roll back numerous regulations, with help from the newly created “Department of Government Efficiency” led by tech entrepreneurs Elon Musk and Vivek Ramaswamy.
During the election, both President Biden and Vice President Harris struggled to gain ground on Trump on the economy. The spike in inflation, which peaked at a 40-year high in 2022, appeared to weigh heavily on both Democratic candidates.
Inflation has since eased significantly, nearly coming in line with the Federal Reserve’s target. However, economists have cautioned that Trump’s plans to levy tariffs on other countries could cause inflation to tick up again.
The president-elect announced late last month that he plans to impose a 25 percent tariff on Mexico and Canada and an additional 10 percent tariff on China when he takes office in January.
