Optimism among small businesses soared in November, exceeding 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 8 points to 101.7 last month. This is the highest reading for the index since June 2021 and the 34th consecutive month below the average.
“The election results signal a major shift in economic policy and are increasing optimism among small business owners,” Bill Dunkelberg, chief economist at NFIB, said in a statement.
The level of uncertainty among small business owners also fell slightly in November, after rising sharply in recent months. The NFIB's uncertainty index fell from a record high of 101 in October to 98 in November.
The net percentage of business owners who expect the economy to improve has increased by 41 points, and the percentage who think it's a good time to expand their business has increased by 8 points. The percentage expecting an increase in real sales volume also rose by 18 points.
“Main Street also feels more confident about the future of business following the election, ending nearly three years of record uncertainty,” Dunkelberg said.
“Owners are particularly excited about tax and regulatory policies that foster strong economic growth and ease inflationary pressures,” he added.
President-elect Trump is widely expected to update or expand several provisions of the Tax Cuts and Jobs Act (TCJA), which he passed during his first term in office, with the cooperation of Republican majorities in both houses of Congress.
The next government is also expected to roll back a number of regulations, with the help of a new Department of Government Efficiency led by tech entrepreneurs Elon Musk and Vivek Ramaswamy.
During the campaign, both President Biden and Vice President Harris struggled to gain an advantage over President Trump on the economic front. The surge in inflation, which is expected to hit a 40-year high in 2022, appears to be weighing on both Democratic candidates.
Inflation has since eased significantly and is roughly in line with the Federal Reserve's goals. But economists warn that President Trump's plan to impose tariffs on other countries could fuel inflation again.
Late last month, the president-elect announced plans to impose 25% tariffs on Mexico and Canada and an additional 10% tariff on China when he takes office in January.
