Small Business Optimism Jumps to Second Highest Level in Measure’s 45-Year History; Tax Cuts Credited

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The National Federation of Independent Business (NFIB) in May determined small business enthusiasm to be at its second highest point since it started tracking the measure in 1973.

The NFIB's small business optimism index reached 107.8 in May, a 3 point increase from the prior month and the highest since the record of 108.0 in 1983, CNBC reported.

Commentary in the NFIB report credited the tax reform signed into law by President Donald Trump at the end of 2017.

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"The new tax code is returning money to the private sector where history makes clear it will be better invested than by a government bureaucracy," it read. "Regulatory costs, as significant as taxes, are being reduced."

The passage of the Tax Cuts and Jobs Act slashed the corporate tax rate from 35 to 21 percent, amongst other reforms.

Expectations for business expansion and positive earnings reports hit record highs and expectations for strong increases in real sales hit their highest mark since 1995.

Other economic indicators are also up, including expectations for overall economic growth and plans to increase employment.

The NFIB's report is mostly good news all around, although it did note increasing prices and concerns about labor quality. Concerns about labor quality can partially be explained by a tight labor market with low unemployment and an abundance of jobs.

NFIB Chief Economist Bill Dunkelberg said in a statement, "Small business owners are continuing an 18-month streak of unprecedented optimism which is leading to more hiring and raising wages."

"While they continue to face challenges in hiring qualified workers, they now have more resources to commit to attracting candidates," he continued.