NFIB Weekly News
Leading the News
SBET Shows Modest Improvement In February.
The NFIB Small Business Optimism Index improved modestly in February, increasing to 101.7. Views about business conditions in the future improved, as well as perceptions of the current period as a good time to expand. The Uncertainty Index fell 1 point to 85, a small decline but still indicative of residual uncertainty from the government shutdown. NFIB President and CEO Juanita Duggan said, “Small business owners are thankful to have the government shutdown in the rearview mirror but need more certainty about the future... Small businesses put their money where their expectations are as we’ve seen when they get tax and regulatory relief. The best thing Washington can do for the small business half of the economy is to continue the policies – tax cuts and deregulation – that leave them with more resources to invest and find qualified workers.”
NFIB: Small Business Job Creation Breaks Record. Business Climate
Bloomberg (3/7) reported that small businesses “added the most jobs per firm in 45 years,” according to a report released on Thursday from NFIB. The report found that “Firms each added 0.52 workers in the last month,” with 16 percent of small business owners also saying they “plan to add jobs in the next three months, down from a record 26 percent in August.”
Mnuchin: Tax Refunds Have “Normalized.”
Bloomberg (3/2, Czuczka) reported Treasury Secretary Mnuchin “said tax refunds have ‘normalized,’ pushing back against complaints that the new tax law is leaving average Americans with smaller refund checks.” His comments are “the second time within days that Mnuchin sought to explain early data and anecdotal evidence proliferating social media that refunds in the first weeks of the tax filing season are lower.” Mnuchin tweeted, “Tax refunds normalized as we expected. #TaxCuts #refunds working.”
Federal Reserve: GDP Growth For 2018 Slightly Under 3 Percent.
Reuters (2/22, Schneider) reported the Administration “will fall ‘a little under’ its target of 3 percent annual growth of gross domestic product for 2018, the Federal Reserve said Friday in a report that offers an economic scorecard of sorts for the first full year of President Donald Trump’s term.” While “growth for the year was ‘solid,’ the Fed said, gross domestic product “rose a little bit under 3 percent for the year as a whole,” shy of the pace White House officials have set as their touchstone for the success of the president’s policies.”
US Job Openings Hit Record High In December.
Reuters (2/12, Mutikani) reported that “US job openings surged to a record high in December, led by vacancies in the construction and accommodation and food services sectors, strengthening analysts’ views that the economy was running out of workers.” According to Reuters, “Job openings, a measure of labor demand, increased by 169,000 to a seasonally adjusted 7.3 million in December, the highest reading since the series started in 2000.” However, “while the release of the Labor Department’s monthly Job Openings and Labor Turnover Survey, or JOLTS, on Tuesday underscored labor market strength, there are worries the shortage of workers could hurt an economic expansion that has lasted 9-1/2 years and is the second longest on record.”
Optimism Index “Returning To Normal Levels As Owners Express Uncertainty About The Future.”
The NFIB Small Business Optimism Index for January was 101.2, slipping 3.2 points since December. Business owners continued hiring and investing, but expressed increasing concern about future economic growth. The reading was the lowest since the weeks leading up to the 2016 elections. Though it remains well above the historical average of 98, it indicates uncertainty among small business owners due to the 35-day government shutdown and financial market instability. NFIB President and CEO Juanita Duggan was quoted saying, “Business operations are still very strong, but small business owners’ expectations about the future are shaky...One thing small businesses make clear to us is their dislike for uncertainty, and while they are continuing to create jobs and increase compensation at a frenetic pace, the political climate is affecting how they view the future.”
Media Sees Warning In Jobs Report But Also Points To Wage Growth.
“Hiring tumbled in February, with US employers adding just 20,000 jobs, the smallest monthly gain in nearly a year and a half,” the AP (3/8, Rugaber) reported, but the result “came after employers had added a blockbuster 311,000 jobs in January.” Also, the report “included several positive signs” with a 3.4 percent increase in average hourly pay “the sharpest year-over-year increase in a decade,” and unemployment fell to 3.8 percent “near the lowest level in five decades.” Still, added the AP, there are “signs that U.S. economic growth is slowing” pointing to “a weaker global economy, a trade war between the United States and China and signs of caution among American consumers.”
Central Banks Adjust Policies To Reduce Odds Of Recession. Small Business Marketing
The Wall Street Journal (3/10, Hilsenrath, Timiraos, Subscription Publication) reported central bankers, concerned about an economic slowdown that could cause a recession, are calling off interest-rate increases sooner than anticipated and are easing monetary policy. Federal Reserve officials have recently shown they will hold off on three short-term interest rate increases planned for 2019, and instead will keep short-term rates at just below 2.5 percent. Economists also expected central banks in other countries to adjust their planning similarly.
WSJournal: Rising Deficit Due To Increased Spending, Not Tax Reform.
In an editorial, the Wall Street Journal (3/10, Subscription Publication) pointed out that according to the CBO, federal tax receipts increased 10 percent in February to $171 billion despite claims that Republican tax reform was denying the government tax revenue and driving up deficits. The Journal argued that the growing deficit has more to do with increased spending than tax reform.
Trump’s Budget Anticipates Faster Economic Growth Than What Prognosticators Expect.
The Wall Street Journal (3/9, Davidson, Subscription Publication) reported that the budget which President Trump is proposing forecasts growth that is much higher than what a lot of autonomous prognosticators are predicting, as they anticipate that the economy will slow due to the diminishing impact of increased government spending and the tax decrease that was enacted in 2017.
Chinese Official Hints At Possible Trade Compromise With US.
The New York Times (3/9, Bradsher, Swanson) reported that Chinese Vice Minister of Commerce for International Trade Negotiations Wang Shouwen “called on Saturday for a compromise between the United States and China that could make a trade deal easier to reach this spring.” Chinese officials have “strongly resisted” the Administration’s demand for “what it calls an enforcement provision” in exchange for “roll[ing] back at least some of the tariffs it placed on $250 billion of imports from China that it imposed last year.” At a morning press briefing in Beijing, however, Wang “raised a possible compromise,” saying that “China would be amenable to an agreement that gave each side an equal right to take trade actions against the other side after an agreement was struck.”
Economic Reports Hint At Weak GDP Growth For Q1 2019, But Stock Markets Rise On Trade Optimism.
Reuters (3/1, Mutikani) reported, “U.S. personal income fell for the first time in more than three years in January and consumer spending dropped by the most since 2009 in December, putting the economy on a weak growth path early in the first quarter.” Reuters added that “the economic outlook was also darkened by other data on Friday showing factory activity hit a more than two-year low in February, with manufacturers reporting slowing new orders and hiring.” According to Reuters, the Commerce Department “said personal income slipped 0.1 percent in January, the first decline since November 2015, after jumping 1.0 percent in December,” while “consumer spending, which accounts for more than two-thirds of U.S. economic activity, dropped 0.5 percent in December. That was the biggest decline since September 2009 and followed a 0.6 percent increase in November.”
SCORE Mentor Discusses Small Business Cash Flow.
Certified SCORE mentor Dean Swanson wrote in his Rochester (MN) Post-Bulletin (3/6) column, “If there is one financial challenge that small business owners should master, it’s cash flow. Your business could have strong sales, healthy profit margins and a growing customer base – but a negative cash flow could sink you. More than 80 percent of failed small businesses experience cash flow problems.” Swanson offered “suggestions on how to maximize your monthly cash flow,” and wrote that SBA loans “often come with more stipulations than bank loans. However, the terms of these loans are generally favorable to small business owners.”
Gewirtz: Cloud Cost Control Challenge For Small Businesses. Wages and Benefits
ZDNet’s (3/5) David Gewirtz explained how cloud cost control can be a challenge for small businesses and freelancers. He writes, “Back in 2017, I talked about how many of the unlimited cloud storage providers were setting limits. Even Amazon had an unlimited cloud storage plan that suddenly increased in price.” He continued, “I have 15 terabytes in Google Drive. Moving that would take months. It’s far easier for me to pony up the extra ten bucks a month than undertake a half-year long migration process.” It’s “that trap that most small business owners will experience.” Gewirtz said that the main challenges are: “price increases out of our control, renewal surge pricing that may come as a surprise, and lock-in in the form of the level of difficulty it takes to move to another provider.” Giving up control “over IT to service providers does come at a price.”
Study: 48% Of Small Business Owners Favor Alexa For Marketing.
MediaPost (3/1, Schultz) reported in continuing coverage that an Uberall study found that “48% of small business owners say Alexa has the most marketing potential.” Alexa was followed by Google Assistant at 29 percent and Apple’s Siri at 17 percent. Uberall co-CEO and co-founder Florian Huebner said, “It’s not surprising that SMB marketers think Alexa could find its way into their plans in the near future. ... In terms of its install base, Alexa is the most popular voice assistant today, with many people using it in their daily lives.”
Adobe’s Content Marketing Survey Reveals What Brand Content Consumers Want.
Forbes (3/1, Davis) reported that Adobe recently surveyed 1,000 US consumers who own one or more digital devices on what makes them “tune in and what makes them bounce” when it comes to content in its Brand Content Survey. Adobe Senior Director of Strategy & Product Marketing Loni Stark said, “As a content marketer, if you’re just thinking about one channel you’re very much behind. It’s not just about making sure you have content that can be distributed to all these devices but also optimized for those devices.” Stark recommends “creating content that’s exclusive, industry-specific and provides business value.” Stark indicated that “Machine learning can help content creators wade through troves of assets to find relevant content and crop to appropriate sizes for various devices.” Adobe found that older and younger consumer spend significant amounts of time online, but older consumers are less willing to share content.
FedEx Small Business Contest Is Back, Prize Pool Largest Yet.
Bizwomen (2/20) reported the “FedEx Small Business Grant Contest is back and bigger than ever.” FedEx “launched its 7th annual contest Tuesday, Feb. 19, with a grant pool of $220,500, making it the largest amount of funds since the contest was launched in 2012.” FedEx Senior Vice President, Customer Channel Marketing Scott Harkins said, “We know it’s difficult for even the most promising of small businesses to grow and scale, especially at the beginning of their lifecycle.” He said, “This year, our winners will receive much-needed expertise and advice on some of the most fundamental and critical aspects of building a viable and sustainable business – and we will stay on with them as a trusted advisor as they take their businesses to the next level.”
Bloomberg Columnist Calls For Regulating Amazon To Aid Small Business.
Noah Smith wrote in his Bloomberg (2/19, Smith) column, that while some have hoped that small businesses would benefit from e-commerce, the “problem” is that e-commerce “is increasingly dominated by a single platform – Amazon.com Inc.” and “increasingly, Amazon makes its own private-label products that compete with the offerings of independent merchants on its platform.” Smith added, “merchants who want to sell their products online have no choice but to be on Amazon, the biggest platform, and play by its rules.” He suggested that regulators should adopt “a nondiscrimination regime” under which third-party merchants could “lodge a complaint with the Federal Trade Commission or another independent tribunal” regarding any discriminatory practice by Amazon.
National Restaurant Association Opposed Bill To Raise Federal Minimum Wage.
Restaurant Dive (3/7, Kelso) reported, “The National Restaurant Association came out against H.R. 582, or the ‘Raise the Wage Act’,” which would increase the federal minimum wage to $15 per hour over the next five years. The NRA argues that “the bill would suppress new job creation in the restaurant industry” and “impose undue harm on small business owners.” However, “the tide on this issue is clearly changing,” with voters in deep red states like Arkansas and Missouri approving increases. However, “as restaurant operators continuously navigate headwinds like food and technology costs, labor is the number one cost for restaurants.” Still, the main concerns from when the push for a $15 an hour minimum wage began in 2012, – “mass closures and position eliminations – haven’t really materialized,” as restaurants “figured out how to better navigate added labor pressures, incorporating efficient technologies, trimming bloated G&A expenses, refranchising and for some, increasing some menu pricing.”
Tipping Practices Evolving With Rise Of $15 Minimum Wage.
The Wall Street Journal (2/26, Kadet, Subscription Publication) reported that with the $15 per hour minimum wage becoming more common throughout the country, food service employees and drivers are seeing smaller tips.
Worker Benefits, Wages Have Been Decreasing Despite Low Unemployment.
The Wall Street Journal (2/23, Kiernan, Subscription Publication) reported that despite low levels of US unemployment, worker benefits and wages decreased, as a percentage of gross domestic income, to 52.7 percent during the third quarter of last year, which was the fourth consecutive quarterly decrease, according to Bureau of Economic Analysis data.
WPost Criticizes Democratic Plan To Boost Social Security Benefits And Raise Taxes On Wealthy.
The Washington Post (2/21) in an editorial criticized the Social Security 2100 Act, a Democratic proposal for reforming Social Security, saying that while Social Security does need “a fix,” it “is not broken – and does not require a radical overhaul.” The Democratic plan would increase benefits, and pay for them “by a gradual increase in payroll taxes” and by “applying Social Security taxes to wage income above $400,000 per year.” The Post favored an alternative Social Security plan that would maintain full benefits “for the 30 percent of workers with the lowest lifetime earnings, while reducing the growth rate” for everyone else.
Wage Gains For Job Switchers Are Highest Since October 2007.
Bloomberg News (2/13, Tanzi) reported that people switching jobs are benefiting from the strong labor market. According to the Federal Reserve Bank of Atlanta’s Wage Growth Tracker, “median wage growth for those who jumped to new positions picked up to 4.6 percent in January from a year earlier, the fastest pace since October 2007. That compared with 3.4 percent for those who haven’t switched jobs, though that measure was down from a 10-year high of 3.9 percent reached in November.”
House Progressives Set To Introduce “Medicare-For-All” Bill.
CQ Roll Call (2/14, McIntire) reported House progressives plan to introduce a “single-payer ‘Medicare-for-all’ bill during the last week of this month.” The measure by Rep. Pramila Jayapal (D-WA), which “will have at least 100 initial co-sponsors,” comes “as Democrats are offering a range of bills to expand health insurance coverage, such as a proposal to allow adults between 50 and 64 to buy into Medicare that was unveiled Wednesday, and presidential candidates refine their positions on what ‘Medicare-for-all’ should mean and the role private insurers would play.”