NFIB Weekly News
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Small Business Optimism Index Sustains Record Highs In April. (05/08/2018)
NFIB’s Small Business Economic Trends Survey saw the “17th consecutive month of historically high readings” in April. NFIB CEO and President Juanita Duggan is quoted saying, “Never in the history of this survey have we seen profit trends so high. ... The optimism small businesses owners have about the economy is turning into new job creation, increased wages and benefits, and investment.” Positive profit trends increased in April due to stronger sales, productivity gains, and the new tax law, while 22 percent cited the difficulty of finding qualified workers as the single most important business problem. Chief Economist Bill Dunkelberg is quoted saying, “There is no question that small business is booming. ... Consumer spending, the new tax law, and lower regulatory barriers are all supporting the surge in optimism across all small business industry sectors.”
BoA: Small Business Growing More Confident In US Economy. Business Climate
Fox Business (4/26) reported that small business “is growing more confident in the U.S. economy, according to a new study by Bank of America.” The study “found 54% of business owners in America expect to see the economy strengthen in the coming year.” The new outlook “is due, in part, to President Donald Trump’s sweeping overhaul of the U.S. tax system, which has given small businesses the opportunity to hire, increase wages and invest in their businesses.”
USA Today (4/26, Davidson) reported small business owners “such as Sandeep Thakrar are overhauling their 2018 business plans as a result of the sweeping federal tax cuts, with many saying they’ll use their savings to boost investment, hire more workers and dole out raises, a new Bank of America survey shows.” Thakrar “owns Neema Hospitality, which operates 10 limited-service hotels in Pennsylvania, Maryland and West Virginia under the Marriott, Hilton, Choice and IHG brands. Among his plans: renovations at his properties. He’s even considering expanding.”
Mnuchin Optimistic Trade Standoffs Can Be Resolved.
The AP (4/22, Wiseman, Crutsinger) reported the IMF and World Bank “repeatedly warned at their meetings this week that intensifying trade tensions could jeopardize a healthy global economic expansion.” But Treasury Secretary Mnuchin “expressed cautious optimism Saturday that countries could settle their differences without a trade war.” Mnuchin, who met “during the past three days with financial officials from China, Japan and Europe over a series of punitive tariffs unveiled by the Trump administration against China and other trading partners,” told reporters, “We are cautiously optimistic.”
US Could Seek Farming, Car Manufacturing Concessions In TPP Talks.
The Wall Street Journal (4/15, Davis, Subscription Publication) reported that if the US were to follow up on the President’s reported desire to re-enter the deal, both sides would seek concessions. In contrast to the pre-2016 period, the US would now negotiate with the TPP-11 bloc, where countries such as Japan, Malaysia and Vietnam are expected to view a US re-entry favorably. In negotiations, the US could push for Japan to improve access to US farm products, particularly a reduction in rice tariffs. To the Journal, Japan may view that as a reasonable price to pay to get the US back in the agreement.
March Small Business Optimism Index Continues 16-Month Streak Of Historically High Results.
NFIB’s SBET for March showed a small business optimism index of 104.7, down from February’s 107.6 from February but still within the top five percent of 45 years of survey results. NFIB indicated that March’s index continues a 16-month streak of results in the top five percent. NFIB President and CEO Juanita Duggan was quoted saying, “It has been a remarkable 16 months for small business optimism. ... This is the first time in 35 years where the fewest number of small business owners have told us that taxes are their number one business problem.” Chief Economist Bill Dunkelberg was quoted adding, “Hiring and spending on new buildings and land acquisition remained at strong levels, a good sign of confidence in economic prospects.”
Mnuchin: Tariffs Won’t Hurt US Economy, US And China Negotiating.
The Los Angeles Times (3/25, King) reported Treasury Secretary Mnuchin said on “Fox News Sunday,” “I don’t expect to see a big impact on the economy” from President Trump’s recent tariff announcements, “brushing aside last week’s market swoon fueled by investors’ fears of a trade war.” However, Trump’s imposition of “stiff tariffs” on steel and aluminum imports has “rattled” investors. The Wall Street Journal (3/25, Tracy, Subscription Publication) reported Mnuchin cast both countries’ trade actions as part of ongoing negotiations.
German Minister Calls For New EU-US Trade Deal Focused On Industrial Sector. (05/08/2018)
Reuters (5/5) reported German Economic Minister Peter Altmaier told a local newspaper that the stalled Transatlantic Trade and Investment Partnership (TTIP) has “proved to be unrealizable,” but that the two nations “should talk about doing something new, such as an understanding concerning selected industrial products.” Reuters noted, “Berlin is urging its European partners to show some flexibility and pursue a broad trade deal that benefits” both the US and Europe, but “some countries are resisting,” with France in particular seeking “a tougher EU stance against” President Trump’s threat of steel and aluminum tariffs.
Labor Department: Unemployment Rate Falls To 3.9 Percent. Small Business Marketing
The AP (5/4, Boak) reported that the Labor Department announced Friday that the unemployment rate fell to 3.9 percent in April, “after having held at 4.1 percent for the prior six months.” As in March, the rate was the lowest since Dec. 2000. The economy added 164,000 jobs, “up from an upwardly revised 135,000 in March,” while the construction industry added 17,000 jobs. The African-American unemployment rate fell to 6.6 percent, the lowest since the rate was first tracked in 1972. The average hourly wage rose 2.6 percent YoY.
Dollar Remains Strong After High US Jobs Data. Reuters (5/7) reported the dollar “stayed near its 2018 peak on Monday after US jobs and wages data did little to temper perceptions of strength in the US economy, though renewed concerns about trade frictions could cloud its outlook.” The euro “changed hands at $1.1962, not far from Friday’s four-month low of $1.1910,” and the dollar “stood little changed at ¥109.10, off its three-month high of ¥110.05.”
ASEAN Nations Brace For Possible US-China Trade War.
The Wall Street Journal (4/28, Watts, Subscription Publication) reported delegates attending the Association of Southeast Asian Nations summit expressed concerns that their nations would be significantly exposed to the possible ramifications of a US-China trade war, with Singaporean Prime Minister Lee Hsien Loong calling the US-China trade tensions “our most immediate and worrying concerns.” Analysts and trade negotiators have said that the region has done little in preparation for a possible trade war, meaning they will not likely conclude negotiations on possible agreements aimed at mitigating the negative effects.
Ross: US To Extend Tariff Relief To Some Allies, But Not All.
Bloomberg News (4/29, Jacobs) reported Commerce Secretary Ross said in an interview over the weekend that the Administration “plans to extend relief from steel and aluminum tariffs to some countries, but not all, when their temporary exemptions expire on Tuesday.” Ross “declined to identify which nations would be spared from the tariffs,” but said an announcement will be made “right before the May 1 deadline for the duties to kick in.”
Tax Law Encourages Profits Remain In US, Assets And Jobs Sent Abroad.
In a front-page analysis, the Wall Street Journal (4/29, A1, Rubin, Subscription Publication) reported that experts say the reduction in the US domestic corporate tax rate from 35 percent to 21 percent will have companies increasingly keeping profits in the US instead of overseas, although the system has new quirks that present slight incentives for companies to hold foreign assets. The Global Intangible Low-Taxed Income tax (GILTI) exempts a risk-free return, calculated at 10% of tangible foreign assets, creating an incentive for manufacturers to put factories outside the US even as European countries are requiring more people and facilities be located in their countries to qualify for tax benefits. In contrast to the old system, in which profits were usually shifted abroad using paper transactions, the new system incentivizes companies to move assets and jobs abroad.
Canada, Mexico Optimistic About Progress Of NAFTA Talks.
Reuters (4/20, Lange) reported that on Friday, “Canadian Foreign Minister Chrystia Freeland and Mexican Economy Minister Ildefonso Guajardo struck a positive note after a second day of meetings” with USTR Lighthizer to modernize NAFTA amid a “push to wrap up a deal.” Freeland told reporters, “We are certainly in a more intense period of the negotiations and we are making good progress.” She added that negotiators “continue to work very hard on rules of origin, really the heart of this agreement.” Guajardo, who Reuters said “has often sought to temper optimism for a quick deal, said the ministers would meet again on Tuesday.”
Communities Across The Country Continue Celebrating National Small Business Week. (05/08/2018)
In a piece for the Baltimore Times (5/4) headlined, “The Best Way To Celebrate National Small Business Week? Shop Local,” author and small business advocate Quint Studer wrote that “April 29 to May 5, 2018, is National Small Business Week. Since 1963 this week has been designated to recognize the impact of America’s entrepreneurs and small businesses. The best way to celebrate and honor small businesses and local entrepreneurs this week – and all year long – is to do business with them.”
Ohio Small Business Owner Highlights SBA, SCORE Resources For Other Entrepreneurs. Wages and Benefits
The Youngstown (OH) Vindicator (5/4, Grzelewski) profiled Tracy Petrekovich, the owner of Hoop and Stitch, a small business in Warren, Ohio. During National Small Business Week, Petrekovich shared her story and offered advice to other entrepreneurs. “Although she opened her business on her own, Petrekovich found some local resources that have helped her. Among them is SCORE, a nonprofit association affiliated with the U.S. Small Business Administration. The volunteer organization provides free assistance to aspiring entrepreneurs and business owners,” the article said. Youngstown SCORE Chapter President Janet Moy directed entrepreneurs to visit the local Small Business Development Center and the local Small Business Administration District Office.
Mayfield Fund Director Examines How Ecommerce Startups Can Compete Against Amazon.
Tim Chang, managing director of Mayfield Fund, wrote in Venture Beat (4/29) about how ecommerce startups can effectively compete against Amazon. Chang recommended starting with a combination of curation, community, and commerce and working to develop crowdsourcing, crowdfunding, C2C marketplaces, and cryptocurrency. Chang said the metrics that matter now are quality of revenue, effective payback period versus cost of acquisition, time to double CAC investments, recurring revenue models, source of traffic, diversified paid acquisition, and customer engagement mechanics.
Semuels: Online Marketplaces Make It Easier For Counterfeiters.
Alana Semuels at The Atlantic (4/20) wrote that the rise of online marketplaces such as Amazon and eBay has made it easier to peddle counterfeit goods. Attorney Chris Johnson, who represents True Religion, said, “Amazon has made it extraordinarily difficult to enforce against counterfeiters.” According to Semuels, while the e-commerce giant “is facing multiple lawsuits from large and small brands who say the company does not do enough to prevent counterfeits from being listed on its website,” no court has found “Amazon liable for selling counterfeit products on its site, because the company has been able to argue that it is a platform for sellers, rather than a seller itself.”
Energy Department Announces Nearly $12 Million In Small Business Research, Development.
The Imperial Valley (CA) News (4/20) reported, “As part of last week’s $99 million announcement by the U.S. Secretary of Energy Rick Perry for Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) research and development projects, the Office of Energy Efficiency and Renewable Energy (EERE) will manage seven new projects across seven states, totaling $7 million in funding.” In addition to “the seven new projects for innovations by small businesses, EERE also manages 33 projects across 19 states, totaling $4.95 million, which was announced as part of SBIR/STTR Phase I awards in February.”
Visa, SBA Partner To Host Small Business Hackathon.
PYMNTS (4/17) reported Visa is partnering with the Small Business Administration host a small business hackathon during National Small Business Week at the end of April. The event “will offer the winner a $10,000 prize for its solution designed for SMBs. Other, smaller prizes will also be up for grabs. The publication said this is the SBA’s first hackathon as part of its Small Business Week celebration.”
NYTimes Analysis: Despite Trump’s Claim, Parts Of ACA Remain In Place. (05/08/2018)
The New York Times (5/6, Rappeport, Subscription Publication) reported that while President Trump “assured his supporters” at a recent rally in Michigan “that he had kept his promise to abolish the Affordable Care Act – even though Congress had failed to repeal” it, “many parts of the Affordable Care Act remain in place,” and the Administration “is even enforcing some of its provisions more aggressively than President Barack Obama did – a reality that has enraged business groups and Republicans in Congress who still want the law officially repealed.” According to the Times, the individual mandate is gone, but the employer mandate “is very much alive” and the IRS “has been pursuing companies that fail to comply.”
Professor Argues For Federal Guarantee Of Employment.
In an op-ed for the New York Times (4/25, Subscription Publication), Erik Loomis, an associate professor of history at the University of Rhode Island, argued in favor of “a federal guarantee of employment,” writing that the idea holds great potential “for helping revive depressed communities.” Loomis added that the idea “is not the full answer to economic inequality or an automated world,” and must be “paired with a higher minimum wage and labor law reforms that allow workers to unionize and win collective bargaining agreements.”
Professor: Congress Should Choose Right Work Requirement Policies.
In an op-ed in the Wall Street Journal (4/11, Subscription Publication), Economics Professor David Neumark wrote that two more-stringent work requirements for welfare programs that federal agencies are encouraged to adopt thanks to President Trump’s executive order this week can work in opposite directions in terms of their effects on future earnings. Neumark cited research finding that a more generous Earned Income Tax Credit (EITC) leads to significantly higher earnings in the long run among less-educated single mothers – an important population group for reducing poverty. Minimum wage policies, on the other hand, lead to higher poverty and an increased reliance on public assistance in disadvantaged neighborhoods. Neumark encouraged lawmakers in Washington to pursue antipoverty policies that lead to economic self-sufficiency in the long run.
Researchers To Examine Whether Minimum Wage Increase In Minneapolis Improves Workers’ Health.
The Minneapolis Star Tribune (4/5, Olson) reported University of Minnesota researchers are “recruiting 450 low-wage workers in Minneapolis to monitor their health – and hopefully see progress – as their wages increase over the next five years because of the city’s new minimum wage standards.” The article explained that the city’s “minimum wage increase is creating a rare opportunity for researchers to” test whether higher income leads to “better health.”
Companies Using Tax Cuts To Reinvest In Workforce.
Business Insider (3/30, Feloni) reported about 15 companies that are using their savings from the Tax Cuts and Jobs Act. For example, FedEx received “$385.7 million in tax savings” from the tax cut and “is putting all of its savings toward an investment in workers and jobs, including $200 in increased compensation and a contribution to the $1.5 billion seven-year plan for building outs its Indianapolis hub.” The story breaks down the investments as “48% to workers” and “52% to jobs.”
WPost Praises Bipartisan Restaurant Tip Provision Within Omnibus Spending Bill.
In an editorial, the Washington Post (3/30) praised the “one nugget of genuine bipartisan policymaking buried within” the $1.3 trillion omnibus spending bill passed last week – the repeal of a proposed Labor Department regulation that seemed to allow restaurants to keep waiter’s tips, as long as they are paid the full statutory minimum wage. The provision also makes clear that “tips belong to workers and may not be diverted into management’s coffers, although they can go to the back of the house when servers get full minimum wage.”