It is well-known that business hates uncertainty, and there are few things that have created more uncertainty than the prospect of a Donald Trump presidency.
So you would think that small businesses—and businesses of all types—would be worried about Trump in the White House. But according to the National Federation of Independent Business, small companies are very optimistic about the incoming Trump administration. Their index of small-business optimism soared between November and December of last year.
In November, the index was at 98.4. But in December, it increased to 105.8. This was the largest month-to-month jump since 1986. December’s optimism level was the highest since 2004.
According to CNBC, there are other signs that small businesses are very optimistic about a Trump administration:
Separate data from Staples last week underscored the positive post-election feeling among small employers, with 85 percent saying they are optimistic about the climate in the new year, 67 percent planning to hire and 72 percent planning on increasing staff wages in 2017.
Small-business borrowing also increased in November, according to Thomson Reuters/PayNet, with the lending index increasing for the first time in six months after Trump was elected.
Small businesses believe there are good reasons to be sanguine over a Trump presidency. For starters, they expect tax reform to be a priority, as Trump plans to cut taxes for all Americans. He also plans to slash corporate income taxes down to 15 percent. He’s going to tax LLCs and other “pass through” legal entities at 15 percent instead of charging them the personal income tax rate, which could be as high as 39.6 percent under the current tax code.
Small businesses are also hoping for regulatory reform. According to Congressman Garret Graves (R-La.), the cost of complying with federal regulations is now $2 billion a year. There are several pieces of legislation designed to reform and eliminate unnecessary federal regulations and restrict the authority of the executive branch to impose new ones, and it’s presumed that Trump will sign at least one of them.
Another big thing small business is hoping for is that the Trump administration will repeal Obamacare. Small businesses have long been dissatisfied with President Obama’s health reform law, especially because they have faced premium increases in some cases of more than 50 percent.
Unlike larger businesses, smaller ones cannot absorb the costs of increased premiums. As a result, they have been forced to dump their employees into the exchanges. It’s cheaper for small businesses to simply pay Obamacare’s fines than cover their employees under exorbitantly expensive insurance plans.
But despite the increased optimism of small businesses, the fundamentals have not changed for them yet. According to NFIB, hiring has only increased by 0.01 per business, job openings have fallen two points, and sales only went up by 1 percent in December.