Small firms think the US is going to be great again - ING

Rob Carnell, Chief International Economist at ING, suggests that small firms seem to like the prospect of a Trump Administration, with the December National Federation of Independent Businesses (NFIB) survey showing the biggest monthly rise in confidence since 1980, taking the index to the highest since the end of 2004.

Key Quotes

“This was a frankly eye-popping release, and well off the scale as far as forecaster expectations. And it is important too, as it could usher in stronger investment from the small firm sector, which has been extremely weak in recent quarters, and could provide a further lift to employment and even wages growth.”

“From a net 12% of firms in November, a net 50% of firms now expect a better economy in 2017. With sales, expansion plans, and compensation all jumping markedly from the previous month.”

“The “single biggest problem” for small firms, according to this survey, is still taxes (net 21%) with government regulation (19%) a close second. But the prospects of lower corporate tax rates and a roll back of regulation seem to be providing small firms with the optimism to expand, invest, and increase employment.”

“While this is encouraging news, it will also provide the Fed with more ammunition to deliver the three rate hikes they signalled in their last press briefing materials. We are still only forecasting two hikes in 2017, but pressure is building to consider adding a third.”