NFIB Weekly News
Leading the News
November’s Small Business Optimism Index Continues Strong Two-Year Trend.
The Small Business Optimism Index in November registered a 104.8 reading, a modest decline but nonetheless continuing an exceptionally strong two-year trend. Expected Business Conditions and Expected Real Sales accounted for slightly more than half of the decline. NFIB president and CEO Juanita Duggan is quoted saying, “Small business owners are enthusiastic about the economy and have demonstrated their optimism by raising wages, creating new jobs, and investing in their businesses throughout 2018. ... Overall, small business owners have shown a historic trend in optimism for their businesses and the economy and continue to be the driving force behind economic growth.”
U.S., Canada, Mexico Sign New USMCA Trade Agreement. Business Climate
The Wall Street Journal (11/30, Schlesinger, Davis, Subscription Publication) reported that the U.S., Canada and Mexico have signed a new trade deal to replace the NAFTA.
The leaders of the three countries “signed an authorization for the deal on Friday morning in Buenos Aires on the sidelines of the Group of 20 summit, with their ministers signing it shortly after,” Bloomberg News (11/30) reported. “The vast majority of the pact still needs to be ratified by lawmakers in the three countries but the signing enacts a handful of immediate protections, such as from auto tariffs.” Bloomberg News reported that uncertainties “remain, as the original 1994 pact remains in effect, and tariffs on steel and aluminum continue to be a major irritant.”
Congress Looks To Pass Bipartisan Tax Bill Next Month.
The Wall Street Journal (11/23, Rubin, Subscription Publication) reported US lawmakers are seeking to pass bipartisan tax legislation after Congress reconvenes after Thanksgiving, a bill which would be a component of government spending legislation for December. The tax bill would deal with a variety of matters, including expired tax decreases and small changes to the IRS, but with Democrats set to take control of the House majority, Congress will not lengthen individual tax cuts which resulted from the 2017 Tax Cuts and Jobs Act, which are set to expire in 2025, and will not implement another 10 percent tax decrease for the middle class, which was previously alluded to by President Trump.
Kudlow Says Next Phase Of Tax Reform Will Not Happen During Lame-Duck Session. Reuters (11/20, Stone, Lambert) reported that NEC Director Kudlow “told reporters on Tuesday the next phase of US tax reform will not happen during the final months of 2018, the ‘lame duck’ period when Republicans will still control Congress. ... Many changes were being considered ‘to make the code more efficient and more pro-growth...flatter rates for everybody, particularly middle class people, get rid of the loopholes,’ Kudlow said to reporters at the White House.” Kudlow continued, “None of this I think will happen [with the current Congress]. ... That doesn’t mean we couldn’t get something in the new session.”
Trump Highlights Report Showing Business Optimism At 45-Year High.
Taking to Twitter last week, the President wrote, “Boom: Record high business optimism, need for employees at 45-year high.” The President also posted a Washington Examiner (11/13, Bedard) story that said “the record level of economic optimism among small businesses is continuing, and those firms trying to fill jobs is at a 45-year high, according to a new” NFIB report. NFIB President and CEO Juanita D. Duggan said, “For two years, small business owners have expressed record levels of optimism and are proving to be a driving force in this rapidly growing economy. ... The October optimism index further validates that when small businesses get tax relief and are freed from regulatory shackles, they thrive and the whole economy prospers.” The Examiner added, “this year’s level has floated between 104 and 108 and in October was 107.4.”
NFIB: Tips For Maximizing Small Business Saturday.
The National Federation of Independent Business published a list of five ways for small businesses to make the most of Small Business Saturday. NFIB advises factoring the day into one’s marketing and promotions, hiring additional staff, emphasize the benefits of shopping locally, and staying organized so that business runs smoothly.
October SBET Continues Two Year-Long Record Optimism Streak.
The Small Business Optimism Index’s (11/13) reading of 107.4 for October indicates that small business optimism has continued a two-year record high streak. NFIB President and CEO Juanita Duggan is quoted saying, “The October optimism index further validates that when small businesses get tax relief and are freed from regulatory shackles, they thrive and the whole economy prospers.” NFIB chief economist Bill Dunkelberg is quoted saying, “October’s report sets the stage for solid economic and employment growth in the fourth quarter, while inflation and interest rates remain historically tame. Small businesses are moving the economy forward.”
Media Analyses: Despite Falling Short Of Forecast, November Jobs Gains Are Still Very Healthy.
Under the headline, “US Hiring Slower But Steady As Employers Add 155K Jobs,” the AP (12/7, Rugaber) reported that US employers “added a smaller but still-healthy number of jobs last month, while the unemployment rate remained at a five-decade low and wages rose at a solid clip.” The AP says the Labor Department data “point to an economy that is still adding jobs at a steady rate after nearly 10 years of recovery.” The Wall Street Journal (12/7, Morath, Subscription Publication) provided similar coverage in a piece headlined “Hiring Slows As Wages Grow, Unemployment Holds At Multidecade Low.”
Reuters (12/7, Mutikani) covered the jobs numbers in an article titled, “U.S. Job Growth Slows In November, Monthly Wage Gains Modest.” Reuters said “the moderation in job gains in November also fits in with other data showing a rise in layoffs in recent weeks and a decline in a measure of services sector employment last month.”
Kudlow: Trump Expects Fed To Pause Rate Hikes Next Year. Small Business Marketing
Bloomberg News (12/7) reported NEC Director Kudlow on Friday said he “expects the Federal Reserve to pause its interest-rate increases for ‘quite some time’ after a possible hike later this month.” Kudlow was quoted as saying, “I think they’re signaling that maybe they’ll do something later this month, maybe, but that would be all for quite some time. I would just add to that, that my boss Mr. Trump, that’s very much in line with his thinking.” Bloomberg News highlighted that Fed Chairman Jerome Powell on Thursday “called the job market ‘very strong’ and said the economy is ‘performing very well overall.’” Bloomberg News added “Kudlow’s views on a Fed pause are aligned with the signals in financial markets, where trading in federal funds futures show expectations for 2019 rate increases have fallen to less than one.”
Powell: US Economy “Performing Very Well Overall.”
Bloomberg News (12/6, Miller, Smialek) reported Federal Reserve Chairman Jerome Powell on Thursday “delivered a bullish assessment of the U.S. economy and the job market on the eve of the scheduled release of November employment data.” Powell asserted, “Our economy is currently performing very well overall, with strong job creation and gradually rising wages.’’ He added, “By many national-level measures, our labor market is very strong.’’ According to Bloomberg News, the Labor Department’s monthly report is “projected to show that U.S. employers added 198,000 jobs to nonfarm payrolls in November,” which is “still considered healthy, though it would be less than October’s 250,000,” even as “the unemployment rate probably held at 3.7 percent, the lowest since 1969, while wages likely advanced 3.1 percent from a year earlier, matching the fastest pace since 2009.”
Moore: Confounding Keynesians, Trump’s Policies Have Prompted Economic Growth.
Heritage Foundation fellow Stephen Moore, in a Wall Street Journal (12/9, Subscription Publication) op-ed, dismissed Keynesian arguments that spending hikes and deficit-financed tax reductions have fueled economic growth under President Trump, saying that these indicators would have propelled economic growth under the Obama Administration, if true. Moore argued Trump’s policies have encouraged business investment and hiring and production increases and contends the economy will continue growth patterns if the Administration solves problems of global trade war rumors and deflationary Federal Reserve policies.
White House CEA Chairman: US Recession Risk “Very, Very Low.”
The Washington Examiner (12/4, Wilhelm) reports Kevin Hassett, chairman of the President’s Council of Economic Advisers, “said Tuesday that the odds of a recession in the US are low, but that there are higher chances of economic slowdowns in Europe and Asia in the near term.” Speaking to the Wall Street Journal’s CEO Council, Hassett said, “I think the big changes is that the Asian economies are slowing, the European economies are slowing. ... I think the [US] recession risk right now is very, very low.”
Gas Prices Drop Below $2 A Gallon In 20 States As National Average Continues To Decline.
Bloomberg News (11/28, Collins) reported, “sub-$2 gasoline can now be found in at least one gas station in 20 US states, as the effects of the bear market in crude oil trickle down to motorists.” Meanwhile, “the national average has fallen for seven straight weeks to $2.53 a gallon, the lowest since March.”
Senator Marco Rubio Focuses On Small Business Issues On Capitol Hill.
The Sunshine State (FL) News (12/9) reported U.S. Sen. Marco Rubio “scored a win last week as the ‘Spurring Business in Communities Act’ passed the Senate and is now headed to President Donald Trump’s desk.” U.S. Sen. Tammy Baldwin (D-WI) was a key backer in the Senate while U.S. Rep. Cathy McMorris Rodgers (R-WA) sponsored the House version and got her bill through that chamber in May. The sponsors insisted the bill will allow Small Business Investment Companies (SBICs) to launch in under-licensed states like Florida and Washington.
American Express, WEX Target Corporate Cards In B2B Automation Push. Wages and Benefits
Payments Source (12/7) reported on American Express’ recent collaboration with WEX, which serves the markets for fleet cards, health care and other technology. WEX’s accounts payable technology, called Synaptic, will work directly with business’ accounting systems. This is designed to support single and multi-use virtual corporate cards directly within Synaptic, reducing the amount of migration work and user experience change. It also provides a path to use virtual cards, considered a key for businesses to automate accounts payable and other B2B transactions. Other incumbent payment companies are entering partnerships or acquisitions to automate supply chains. PayPal bought Hyperwallet to improve its ability to reach businesses that have financial obligations to contractors. Visa and Worldpay are using their digital rails to speed settlement for business payments; and Mastercard, First Data and Greet Dot have attacked payroll inefficiencies. The expansion of e-commerce places a stress on inventory management, while gig economy payments change payroll practices. These trends threaten the relevance of companies that still rely on legacy systems to manage supplier relationships.
Mobile Payments Helping Small Business Owners Reach More Customers.
NBC News (11/24) examined how technology is helping small businesses “embrace today’s changing retail world,” discussing how mobile payment apps like Square can help small business owners. One told NBC News, “We used online to tap into the retail space, to make our business different. All of a sudden, we were able to reach customers far beyond our small town instantly.”
SBA Administrator Promotes Small Business Saturday As Holiday Shopping Starts Off Strong.
In a Fox News (11/22, McMahon) op-ed, SBA Administrator McMahon declared that “with the holiday shopping season upon us, it’s easy to get swept up in the frenzy over Black Friday and Cyber Monday,” but “for nearly a decade, Small Business Saturday has helped independently owned stores compete with national chains, online retailers and big box stores.” McMahon added this Small Business Saturday “has the potential to be even greater,” as the National Retail Federation “forecasts holiday retail sales will increase between 4.3 and 4.8 percent over last year. Nationwide, shoppers are expected to spend as much as $720 billion.” According to McMahon, “The tax cuts spearheaded by President Trump mean more workers have gotten new jobs, raises, and bonuses – giving them more money to spend.”
Linda McMahon Discusses Small Business Saturday, SBA Resources.
Small Business Administration Administrator Linda McMahon appeared on MSNBC (11/18), where she encouraged consumers to support small business owners on Small Business Saturday, November 24. McMahon also highlighted the “full breadth and scope” of the SBA, as well as the resources available through its partnerships with Small Business Development Centers, SCORE chapters, and Women’s Business Centers.
PayPal And Square Quietly Grow Small Business Lending.
CNBC (11/16) reported that tech companies such as PayPal and Square have become an increasingly popular financing resource for small business owners who have bad credit or for those who want to cut down on paperwork and access funds more quickly. PayPal and Square both reported significant growth in their loan portfolios in the third quarter. These tech companies have “a few advantages over traditional lenders – they’re able to keep costs low and they have access to transaction data from months or sometimes years of activity. The sales data gives them an alternative to traditional credit scores when deciding whether to lend money.” However, experts and former regulators worried about credit risks and complicated interest rates.
Manchin Pitched Idea Of Reviving ACA Fix To Trump.
The Hill (12/5, Sullivan) reported Sen. Joe Manchin (D-WV) said that when he and the President had lunch on Monday, he pitched the idea of “reviving a bipartisan fix to the Affordable Care Act.” Manchin told reporters Wednesday, “I said he’s the one who can make a difference. ... We already have a bipartisan agreement. If he signs onto it, it would be great.” Last year, Sens. Lamar Alexander (R-TN) and Patty Murray (D-WA) “reached a bipartisan agreement aimed at reducing ACA premiums and stabilizing the market, but the deal eventually fell apart.” Manchin “is now looking to revive the deal, noting that Trump’s backing would be key.”
Administration Proposal Would Allow ACA Subsidies To Be Used For Wider Variety Of Plans.
The Washington Post (11/29, Goldstein) reported that the Administration is “urging states to tear down pillars of the Affordable Care Act, demolishing a basic rule that federal insurance subsidies can be used only for people buying health plans in marketplaces created under the law.” The Post said that “federal health officials” advised that states should be “free to redefine the use of those subsidies, which have since 2014 provided the first help the government ever has offered consumers to afford monthly insurance premiums.”
Senators From Both Parties Want To Delay ACA Health Insurance Tax.
The Hill (11/30, Weixel) reported that a small group of senators from both parties is “urging leadership to extend a delay of ObamaCare’s health insurance tax before the end of the lame duck session.” The article said this tax “has been criticized by Republicans and some Democrats for driving up premiums.” The tax “has already been suspended for 2019.”
Case Made Against $15 Minimum Wage.
In an op-ed for the Wall Street Journal (11/22, Saltsman, Subscription Publication), Michael Saltsman, managing director at the Employment Policies Institute, argued against a $15 federal minimum wage, which Democrats have said is high on their agenda. Saltsman wrote that while Democrats say the federal minimum wage and those who earn it have been stuck, Bureau of Labor Statistics data show the number people earning the minimum has declined annually since 2010.
Former Fidelity President Backs Measure Making It Easier For Small Companies To Offer 401(k)s.
Robert C. Pozen, former president of Fidelity Investments, argued in the Wall Street Journal (11/19, Pozen, Subscription Publication) that Congress must make it easier for small companies to offer their employees 401(k)s. Pozen offered his support for the Retirement Enhancement and Savings Act, or RESA, which would allow unrelated employers to sponsor multiple-employer plans and permit qualified financial firms to offer a standard plan to groups of small employers. Pozen called on the Administration to work with Congress to adopt RESA by the end of the year.
Commentary Considers Healthcare Reform.
Alain Enthoven wrote in a Wall Street Journal (11/22, Subscription Publication) op-ed that some 60 percent of Americans with employer-sponsored coverage receive healthcare through self-insured plans. He argued that this is problematic because these plans lack capped budgets. According to Enthoven, a better option is prepaid group plans which allow employers to pay hospitals pre-determined, fixed amounts.
Mike Roach, co-owner of Paloma Clothing in Portland, OR, and a member of Small Business Majority’s Small Business Council, wrote in an op-ed for The Hill (11/23) that recently, when the Trump Administration finalized new rules which “will allow some employers to opt out of providing their employees with access to birth control coverage, it didn’t just attack women’s rights, it also went against the wishes of most small businesses, which support providing contraceptive coverage in employer-sponsored health plans.” Roach argued that letting employers “opt out of birth control coverage gives them the opportunity to ignore a rule established by the Affordable Care Act (ACA), which states that employer-provided health insurance plans must include access to no copay contraceptives.”
The information provided is meant for general informational purposes only and does not constitute tax, business or legal advice.