U.S. small-business owners are the most optimistic they have been since July 2007, according to the latest Wells Fargo/Gallup Small Business Index.
The overall index is now at 100, up 20 points since November and up 33 points from one year ago. This represents the largest quarterly increase in three years, Gallup reported.
Owners' overall ratings of their financial situation, cash flow and revenues improved this quarter:
- Improved revenue: 45% of small-business owners said their revenues increased a little or a lot in the past 12 months -- up from 37% in November.
- Stronger cash flow: 64% indicated their cash flow over the past 12 months was very or somewhat good, up nine percentage points from 55% in November and the highest rating on this metric since the third quarter of 2007.
- Overall financial situation: 71% said their overall financial situation is very or somewhat good -- up from 66% in November and the highest percentage for this question since the fourth quarter of 2007, when 72% indicated this.
Part of owners' improved mindset may reflect their perceptions that regulations will be decreased under the new administration, after President Donald Trump's executive order calling for a regulatory freeze.
Owners may also be reacting positively to the general rise in economic confidence and record highs on major stock indices, Gallup explained.
Meanwhile, economists say that when it comes to assessing the genuine potential for the United States economy, confidence among small-business owners is a more grounded and forward-looking indicator, The New York Times reported.
Companies that employ several to a few hundred workers make up 99 percent of business in the United States and account for half of private sector employment.
"So for all that General Electric, Caterpillar or Ford Motor talks about building factories and hiring workers, the $18 trillion United States economy will not truly move until the burghers in Toledo and other parts of the country start to invest and add jobs," The Times reported.
As an example, the Times talked to Louis M. Soltis, who owns a small company that manufactures control panels for large factories and machines. "After four years of not adding to his work force of 22, he has seen orders for panels jump in the last two months and is looking to take on as many as six new workers," the Times reported.
“That guy is a junkyard dog, doing his tweets at 3 a.m. and taking on the news media — I just get strength from him,” Soltis told the Times. “And I have to say, it makes you feel gutsy — ready to step up and start investing again,” Soltis said.
Other small-business operators agreed.
“My gut just feels better,” said Bob Fleisher, president of a local car dealership. “With Obama, you felt it was personal — like he just didn’t want you to make money. Now we have a guy who is cutting regulations and taxes. And when I see my taxes going down every quarter — well, that means I am going to start investing again.”
(Newsmax wire services contributed to this report).
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