Small business confidence had its highest month-to-month jump since 1980, according to a survey conducted by the National Federation of Independent Business, a Republican-leaning pro-business group.
The NFIB confidence index jumped 7.4 points in December to 105.8, which is the highest level it has been since 2004. The survey questioned more than 600 small business owners through Dec. 28, 2016.
“We haven’t seen numbers like this in a long time,” Juanita Duggan, president and chief executive of the NFIB, said in a statement, according to Bloomberg. “Small business is ready for a breakout, and that can only mean very good things for the U.S. economy. Business owners are feeling better about taking risks and making investments.”
“Business owners who expect better business conditions accounted for 48 percent of the overall increase,” said NFIB Chief Economist Bill Dunkelberg. “The December results confirm the sharp increase that we reported immediately after the election.”
The NFIB said confidence in business expansion is three times the average and can be attributed to President-elect Donald Trump's plans to deregulate and lower taxes.
“Business owners are feeling better about taking risks and making investments,” said Duggan. “Optimism is the main ingredient for economic expansion. We’ll be watching this trend carefully over the next few months.”
“Rising confidence adds to the economy’s upward momentum,” Jim O’Sullivan, chief U.S. economist at High Frequency Economics, told Bloomberg.
But O'Sullivan did note there could be a partisan bias in the NFIB's findings.
The “NFIB membership appears to be disproportionately Republican, so it is possible that the data will start overstating strength, opposite the pattern during the Obama administration,” O'Sullivan said.