NFIB Weekly News
Leading the News
US Small Business Optimism Soars In December.
The NFIB’s latest Small Business Economic Trends report shows small business owners’ optimism increased in December following the presidential election. The index jumped up 7.4 points to 105.8, the highest level since 2004, mostly due to a major jump in the number of small business owners expecting better business conditions, which rose from 12 percent in November to 50 percent in December. NFIB President and CEO Juanita Duggan said, “We haven’t seen numbers like this in a long time. Small business is ready for a breakout and that can only mean very good things for the U.S. economy.” NFIB Chief Economist Bill Dunkelberg added, “The December results confirm the sharp increase that we reported immediately after the election.”
Fed Officials Expect “Somewhat Faster Economic Growth” Under Trump Administration. Business Climate
Minutes of the Federal Reserve’s most recent meeting in mid-December show that while central bank officials expect President-elect Trump’s election “to result in somewhat faster economic growth over the next several years,” the Fed “plans to raise interest rates more quickly if growth accelerates,” the New York Times (1/4, Appelbaum, Subscription Publication) reported.
In his Wall Street Journal (1/4, Subscription Publication) column, Greg Ip wrote what while the surge in stock prices since President-elect Trump’s victory raises the possibility that the US economic growth is about to improve thanks to improved business and investor confidence, at some point, that confidence must be matched by results. While President-elect Trump’s Administration will bring a great deal of business experience to government, Ip wrote, how they apply that experience to government will determine their impact on the economy.
Media Analyses: Post-Election Mood Boosts Economy, Stocks.
Politico (12/28, Woellert) reported, “Economists say Donald Trump is right to credit himself for sending consumer confidence to a 15-year high” and having “put the country in a good mood.” Mark Vitner, a senior economist at Wells Fargo, said, “There’s a lot of hope that things are going to change and get better.” Lynn Franco, the Conference Board’s director of economic indicators, said, “Optimism did surge after the election.”
Trump’s Election Victory Has Small Businesses Upbeat About 2017.
The AP (12/28, Rosenberg) reported that Donald Trump’s election as president “has made many small business owners more upbeat about 2017.” The AP attributed increased optimism to expectations of higher revenues, lower taxes, and a regulations roll-back, “including parts of the health care law.” Yet, many “recognize it will take time to see what the administration’s plans are, and what it will accomplish.” In a Wells Fargo survey of business owners taken after the election, 46 percent of the 600 questioned “said the operating environment for their companies would improve next year; that compares to 30 percent two years ago, after the last congressional elections.” In addition, just a little more than half the owners “said actions that Trump and Congress will take next year will make their companies better off.”
WPost, CSMonitor Analyses Consider Trump Tax Reform.
In an analysis, the Washington Post (12/23, Snell) considered the “five big things standing in the way of Trump’s tax reform promises.” According to the Post, the obstacles include: cutting tax rates “without ballooning the deficit,” securing public support for “a plan that will help the super-rich,” adopting measures that will “tax international businesses,” and winning bipartisan and business support for the reforms. Meanwhile, the Christian Science Monitor (12/23, Montlake) examined the likely beneficiaries of Trump’s growth-focused economic reform plan.
Republicans Plan Major Overhaul Of Tax System.
The AP (12/24, Ohlemacher) reported that congressional Republicans “are planning a massive overhaul of the nation’s tax system next year.” The effort, which “could ultimately affect families at every income level and businesses of every size,” is aimed at “simplify[ing] a complicated tax code that rewards wealthy people with smart accountants, and corporations that can easily shift profits – and jobs – overseas.” Senate Majority Leader McConnell and House Speaker Ryan have vowed to pass a revenue neutral plan, but “passing a massive tax package will require some tough votes, politically.” While some “key Republican senators” say “a tax overhaul must be bipartisan to be fully embraced by the public,” and congressional Democrats “say they are eager to have a say in overhauling the tax code,” McConnell “is laying the groundwork to pass a purely partisan bill,” and both he and Ryan “said they plan to use a legislative maneuver that would prevent Senate Democrats from using the filibuster to block a tax bill.”
Business Owners To See Changes In Tax Law, Health Insurance In 2017.
USA Today (1/7, Rosenberg) reported on changes in tax law and other rules for 2017, highlighting changes for small business owners. Among those changes is a bigger deduction for equipment purchases, changes in health coverage requirements, and a smaller deduction for owners using vehicles for business.
Legislators “Moving Rapidly” To Restrain Federal Regulations. Small Business Marketing
In a “trio of House bills,” the San Francisco Chronicle (1/9, Lochhead) reports, Republicans are “moving rapidly” to “gut the administrative process used for decades to implement the practical details of such landmark laws as the Food and Drug Act, the Clean Air Act and the Fair Labor Standards Act.” The “centerpiece” of the Republican action was the REINS Act, which “cleared the House on Friday, with an amendment that extended its reach to include all regulations adopted by federal agencies within the past 10 years.” The act would “require any rule costing industry more than $100 million – a dollar figure that amounts to any significant regulation – to be submitted to Congress. If either chamber fails to approve the rule within 70 days, the rule would die.” The rules “could affect everything from” food labeling to performance standards for residential wood stoves and energy efficiency standards in grocery store coolers.
Trump, Alibaba Chairman Discuss Plans To Create One Million Jobs In US.
Bloomberg News (1/9, Schuetz) reports that Alibaba Group Holding Ltd. Chairman Jack Ma met Monday with President-elect Trump Monday to discuss “plans to create 1 million new jobs in the US by helping small businesses sell goods to China.” While the meeting came “amid tensions between Alibaba’s home country and the incoming administration” as Trump “has called for high tariffs on trade with China” and Alibaba “was recently put back on the US ‘Notorious Markets’ list,” the “announcement of new jobs pleased Trump and he was quick to praise Ma.” Reuters (1/9, Henderson, Alexander, Chiacu, Kearney) says Ma “laid out the Chinese e-commerce company’s new plan to bring a million small US businesses onto its platform to sell to Chinese consumers” over the next five years, an Alibaba spokesman said. The Los Angeles Times (1/9, Pierson) says “a pledge to create American jobs would help counter one of Trump’s chief concerns about the US relationship with China – namely that the yawning trade gap was stifling employment at home.”
Corporate Tax Reform Expected To Come This Year.
Neil Irwin wrote in the New York Times (1/7, Irwin, Subscription Publication) “The Upshot” that US corporate tax policy “is a mess,” pointing out that the US has a higher tax rate for businesses, but collects less money as a percentage of GDP than do most other countries. Irwin expected that to change significantly, especially if Republicans base their plan on one proposed by House Republicans last summer that would have enacted a “destination-based cash flow tax with border adjustment.” Irwin said it would be the biggest change since the corporate income tax was first enacted. The plan would tax “domestic cash flow” rather than income, which Irwin explained, would end efforts to manipulate income and corporate inversions because neither would affect tax liability. The policy is, however, likely to harm firms that rely on selling imported goods.
House Approves Bill To Overturn Obama’s Recent Rules With One Vote.
Reuters (1/4, Lambert) reported that the House passed a measure that will move forward a “campaign to strip down federal regulations” and give Congress the power “to kill dozens of” recently enacted regulations. The Hill (1/4, Wheeler) said the Midnight Rule Relief Act would allow Congress “to repeal in a single vote any rule finalized in the last 60 legislative days of the Obama administration.” If approved by the Senate and signed by President-elect Trump, “the legislation would amend the Congressional Review Act to allow lawmakers to bundle together multiple rules and overturn them en masse with a joint resolution of disapproval.”
A Wall Street Journal (1/4, Subscription Publication) editorial decried the wave of so-called midnight regulations from the Obama Administration since the election, and praised Congress for taking steps to roll them back.
Investors Optimistic About Prospects For Start-Ups In 2017.
The New York Times (12/29, De La Merced, Subscription Publication) reported in its “DealBook” column that while the amount of money going to US start-ups “fell in 2016 for the first time in four years as the number of deals struck tumbled to their lowest levels since 2011,” the tech world is optimistic that “2017 will prove to be brighter, as the parent company of Snapchat and other highfliers prepare to go public and venture capitalists amass huge new war chests.” According to data from PitchBook, the $67.8 billion invested in start-ups in 2016 was “down 15 percent from last year,” but investors “are betting 2017 will be better” as “some boldface names” are “preparing to begin trading in the public markets next year.”
Digiday’s List Of What’s In And Out In 2017: “Memberships,” Not “Ads.”
Digiday (12/30) posted its “definitive” but always-fun list of “what’s in and what’s out” for 2017. On the in vs. out list are concepts such as “memberships” vs. “ads,” “artificial intelligence” vs. “big data,” “second-party data” vs. “third party data,” and “blocking ad blockers” vs. “Please turn off your ad blocker,” and “header bidding” vs. “waterfalls.”
For what won’t happen in 2017, Digiday (1/2, Willens) turned to some industry experts for predictions. Tim Mahlman, President of AOL Platforms, said, “Walled gardens will not drop their walls. You’re not going to see the duopoly change the way they’re thinking,” while Charlie Fiordalis, Chief Digital Officer at Media Storm, said, “Twitter isn’t going to regain its position as a preeminent social platform. It pains me to say it, because I’m an avid user, but they’ve lost the cool factor, have stopped growing and haven’t been able to break through as an OTT platform.” Topics included ad blocking, artificial intelligence, content valuation, and others.
Big Brands Using Custom Profiles On Twitter For Customer Service. Wages and Benefits
Digiday (1/5, Dua) examined how various big brands are using Twitter for customer service, “from dealing with pesky trolls to legitimate complaints and everything in between.” Companies using Twitter’s custom profiles for customer-oriented displays include Citibank, the website Hotels, Hyatt, and Starbucks. Digiday said the response from brands has caused Twitter to extend “features it began testing out last summer to a broader range of brands,” although the company said “the featured tweets product is still in testing.”
Infographic Explores How Generations View User Content On Social Media.
AdWeek (1/2, Bazilian) reported on an infographic that contrasted how Millennials and Baby Boomers view and share user-generated content on social media. The data for the graphic is based on a survey done by Olapic, an earned content firm. A trait common to all the generations is that 76% of the respondents “believe the content that average people share is more honest than advertising from brands.” Olapic’s Co-Founder Pau Sabria said that finding “should serve as a wake-up call for brands.”
NPD Group Predicts 60% Growth In Connected-TV Devices By 2019.
MediaPost’s Marketing Daily (12/29, Baer) reported that the Connected Home Forecast from the NPD Group predicts that there will be 60% growth in the number of devices that connect TV sets to the internet by 2019. At the end of that year, the forecast is for 43% of homes with internet service “will have at least one streaming media device.” Nominally, that translates to 238 million devices, Marketing Daily added.
Marketers Face New Challenges With Generation Z’s Perception Of Brands.
Advertising Age (12/27, McGoldrick) examined “The Gen Z Challenge” for marketers, pointing out that some 27% of the world’s population belongs to those “born between 1997 and 2011.” Ad Age said that Gen Z not only challenges “how brands communicate, they challenge the very notion of a brand’s authenticity” and “expect brands to be fully transparent.” The group also “seeks a digital experience” that includes “a focus on imagination through technologies such as Augmented Reality and Virtual Reality, nonverbal immersive formats, music and stronger visual imagery.” As an example, Ad Age recommended Patagonia’s Fair Trade campaign.
In Poll, 83% Of Email Marketers Prefer Newsletters Over Stand-Alone Messages.
MediaPost’s Email Marketing Daily (12/28, Nelson) reported that a poll of 300 US email marketers by the research and consulting firm Clutch found that “newsletters were the most common form of email sent by marketers in the first half of 2016.” Overall, 83% of the respondents preferred newsletters, “followed closely by the 79% of marketers who send stand-alone email messages.” The newsletters primarily “are sent in the morning, at the beginning or end of the work week.” Email Marketing Daily added that “it appears from the study that email marketers are embracing the best email practices of personalization and segmentation, but A/B testing lags in adoption.”
Labor Department: US Employers Added 156,000 Jobs In December.
The Labor Department released its monthly employment report showing that US employers added 156,000 jobs in December, “capping a year of slower but solid hiring,” the AP (1/6, Rugaber) reported. In addition, the unemployment rate rose to 4.7 percent from a nine-year low of 4.6 percent, while hourly pay “jumped 2.9 percent from a year earlier, the biggest increase in more than seven years.”
On its front page, the Wall Street Journal (1/6, Morath, Subscription Publication) said the gains were down from November and 2016 had the fewest new jobs since 2011. The Journal noted there continues to be slow growth in wages, a low rate of labor force participation, and many in part-time jobs who would like to have full-time work.
Tight Labor Market Could Lead To Shortage Of Skilled Workers. The AP (1/7, Salsberg) reported that some economists “are waving caution flags about an increasingly tight labor market in which key industries are finding it more difficult to secure the highly skilled employees they need to continue flourishing.”
Legislators Planning To Repeal ACA.
The New York Times (1/4, A1, Pear, Subscription Publication) reported Vice President-elect Mike Pence and the top Republicans in Congress “made clear on Wednesday, more powerfully and explicitly than ever, that they are dead serious about repealing the Affordable Care Act.” The Times said “a determined Republican president and Congress can gut the Affordable Care Act, and do it quickly: a step-by-step health care revolution in reverse that would undo many of the changes made since the law was signed by President Obama in March 2010.” The legislation “would probably leave the most popular provisions of the health law intact, such as the prohibition on insurers’ denying coverage to people with pre-existing conditions.” Instead, the Times added, the legislation would eliminate the tax penalties imposed “on people who go without insurance and on larger employers who do not offer coverage to employees,” limit state Medicaid funds, and repeal public marketplace subsidies.
Minimum Wage Increases Take Effect In Several US States.
The AP (12/29, Klepper) reported that nineteen states, including New York and California, “will ring in the year with an increase in the minimum wage.” Massachusetts and Washington state “will have the highest” new minimum wages in the country at $11 per hour. California will raise its wage “to $10.50 for businesses with 26 or more employees,” while New York state is “taking a regional approach, with the wage rising to $11 in New York City, to $10.50 for small businesses in the city, $10 in its downstate suburbs and $9.70 elsewhere.” Meanwhile, voters in Arizona, Maine, Colorado and Washington “approved increases in this year’s election,” and seven other states, Alaska, Florida, Missouri, Montana, New Jersey, Ohio and South Dakota, “are automatically raising the wage based on indexing.” The other states seeing increases are Arkansas, Connecticut, Hawaii, Michigan and Vermont.
The New York Times (1/2, Board, Subscription Publication) in an editorial argued that without a federal increase, state-by-state increases are likely to continue, shutting out “large areas, especially in the South.”
USA Today Analysis: Delayed Obamacare Repeal Could Lead To State-Level Experimentation.
USA Today (12/22, O'Donnell) reported that if legislation for the expected repeal of Obamacare includes a delay, Diane Rowland of the Kaiser Family Foundation “predicts states will propose more waivers from Medicaid expansion’s requirements in advance of the fixed ‘block grants’ likely to be proposed” by the Trump Administration. This “could turn states into...’laboratories of democracy’” in terms of healthcare funding.
Replacing Obamacare Could Take Years
McClatchy (12/21, Lightman) reported that while Republicans are “determined” to quickly repeal Obamacare, “consumers may not notice any difference in their health care coverage for a long time” because while eliminating the law “should be fairly easy,” the “harder task is replacing it, and ‘the eventual result will take several years,’” according to Senate Health, Education, Labor and Pensions Committee Chairman Sen. Lamar Alexander. In the House, Rep. Mark Walker, who will chair the House Republican Study Committee next year, favors “dramatic changes, but he warns that moving too quickly is unrealistic.”
House Republicans Consider Leaving Obamacare Taxes In Place.
Citing “lobbyists familiar with the discussions,” The Hill (12/21, Sullivan) reported that Republicans on the House Ways and Means Committee “are considering holding off on repealing some of ObamaCare’s taxes.” According to the sources, the lawmakers have “discussed the possibility of keeping some of the taxes in place during a retreat last week at the Library of Congress.” The Hill stressed, however, that even if the taxes are not eliminated as part of the repeal measure, “it does not necessarily mean they will remain indefinitely.” Some of the taxes “could be dealt with as part of a larger tax reform bill later in the year.” Nonetheless, it is possible that “some taxes could remain in place to provide revenue for a replacement healthcare measure.”