December was a banner month for the National Federation of Independent Business (NFIB) optimism index. The long running survey revealed heightened optimism among American small business owners increasing a lofty 7.4 points — the largest monthly hike since July of 1980. While 7.4 points in a month may not sound like a huge deal, the impact of such an increase becomes much more apparent when you see the growth curve on a chart. Take a look:
What exactly is accounting for this historic increase? The organization calculates that the lion’s share of the improvement is coming from expectations about what economic conditions will look like 6 months from now — shortly after the president-elect has had a chance to begin implementing his policy agenda. The NFIB reports:
Seventy-three percent of the gain in the Index was accounted for by more positive views about business conditions six months from December and improvements in real sales volumes. Improved views about the climate for expansion added another 15 percent, so more optimistic expectations account for 88 percent of the Index’s improvement…
This data and analysis derives from a wave of economic optimism in recent weeks resulting in several large corporations pledging substantial investment in American manufacturing and job creation activity over the next 4 years. Will this trend continue? Let us know your thoughts on where the U.S. economy is headed in the near future on Facebook or in the comments below.