The Return of Confidence
Small-business confidence lagged large-company sentiment (represented by the ISM index) throughout the recovery, but is rapidly trending higher.
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Sources: National Federation of Independent Businesses, “Small Business Economic Trends” Monthly Survey (December 2016). Institute for Supply Management, “Manufacturing ISM Report on Business.”
Note: The National Federation of Independent Businesses’ Optimism Index is comprised of mostly small businesses, while the Institute for Supply Management’s Manufacturing Index tracks mostly large businesses.
- Large businesses used workforce reduction to help contain costs and increase productivity and efficiencies, and were able to cut capital expenses.
- Smaller firms had challenges accessing credit, which affected sales, inventories, and short-term debt.
- New business formation and job growth in the recovery has been concentrated in about 20 counties out of more than 3,000 in the U.S.
- If labor costs rise as we approach full employment, productivity will become an increasingly important component of corporate profitability.
- It will be vital for businesses to innovate and automate to compete globally.
- The new U.S. administration’s stated commitment to lower corporate tax rates and fewer regulatory policies could improve the environment for both large and small businesses.
- Over time, corporations may use a leaner core organizational structure and rely on a loose network of contractual workers.