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Small Business Optimism Climbs to Historic Levels

Small business confidence index in the US has risen to the highest level in over a decade consistent with growth expectations despite risks.

Small Business Optimism Climbs to Historic Levels
Small Business Optimism Climbs to Historic Levels. Credit | REUTERS


United States: The optimism regarding the small business environment in the United States increased in December to reach the highest level since March 2008, keeping up with the improvement observed after political decisions made last year, as reported by Reuters.

Optimism Hits a Milestone

It added that the National Federation of Independent Business reported that the Small Business Optimism Index was up by 3.4 points to 105.1 in the last month, which was the highest they recorded in the past nineteen months since October 2018.

A Positive Trend for Small Businesses

It was the second straight month that the index went above 98, a figure that was considered average and which was the average for the past 51 years. The overall uncertainty index in this survey decreased by 12 points and equal to 86. Republicans won the U.S presidency and the U.S. Congress after the election held on November 5. In the United States at the moment, small business people incline towards supporting the Republican party.

However, other sentiment surveys also edged higher after the election, but moderation is already arising among consumers due to fear that general tariffs on imports and deportations of illegals promised by Trump’s incoming government may increase prices within households.

Concerns About Tariffs and Inflation

University of Michigan’s index of consumer sentiment declined last Friday, but its survey revealed that both one-year and long-run inflation anticipations surged in January.

Strong Economic Outlook Among Business Owners

The outlook for the economy by small business owners rose to 52%, up by 16 points, in December, which is the highest reading since the fourth quarter of 1983. The share of respondents who said now is a good time to expand their business was more significant since February 2020. More small business owners forecasted an increase in their real sales, as reported by Reuters.

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