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NFIB Weekly News

NFIB Weekly News Leading the News

Small Business Optimism Historically Strong At End Of 2019 (01/14/2020)

NFIB’s Small Business Optimism Index (1/13) ended 2019 with a historically strong reading of 102.7. Seven of 10 components fell from November, while a larger number of small business owners reported improved business conditions and expected higher nominal sales in the coming three months. NFIB Chief Economist William Dunkelberg is quoted saying, “December marked the end of another banner year for the small business economy, as owners took full advantage of strong consumer spending, and federal tax and regulatory relief. ... 2020 is starting out with a solid foundation for continued growth, two-years into the Tax Cuts and Jobs Act that’s providing fuel to grow small businesses and their workforce.”

Fed Sees Little Risk Of Recession (01/07/2020)

The AP (1/3) reported that minutes of the Federal Reserve’s December meeting show that it “saw much less risk of recession when it...signaled that it expected to keep low rates unchanged through this year.” According to the AP, “Minutes of the December meeting, released Friday, showed that Fed officials favored keeping rates in a low range of 1.5% to 1.75% to cushion the U.S. economy from slow global growth and the Trump administration’s trade conflicts.” The AP said Fed officials “were also concerned that inflation still hadn’t reached the Fed’s target level of 2%.”

Lower-Income Workers’ Earnings Rising The Fastest (12/31/2019)

In a front-page article headlined “Rank-and-File Workers Get Bigger Raises,” the Wall Street Journal (12/27, A1, Morath, Sparshott, Subscription Publication) reported workers who are paid less are currently benefiting from higher wage gains than those who earn more than average. Citing the Federal Reserve Bank of Atlanta, the Journal reported that those in the bottom quarter of earners saw their wages rise an average of 4.5% in November versus a year earlier, while wages for those in the top quarter rose just 2.9%. The Journal said the Labor Department has reported that nonsupervisory workers’ earnings jumped 3.7% last month as compared to November 2018, which was more than the 3.1% gain for managers.

Fed Officials: Economy “Doing Remarkably Well” (12/24/2019)

Reuters (12/18, Saphir, Marte) reported the US economy “is in good shape after three interest-rate cuts this year, two U.S. central bankers said on Wednesday, underscoring the consensus at the Federal Reserve for keeping borrowing costs where they are for the time being.” Chicago Federal Reserve Bank President Charles Evans told the Economic Club of Indiana, “I think the economy is doing remarkably well.” Reuters added that although Evans “is ‘personally worried’ that inflation continues to run below the Fed’s 2% target, he now sees enough accommodation in place to boost it to 2.2% by 2022.”

Fed Leaves Rates Unchanged, Predicts Strong Economy Through 2020 (12/17/2019)

The Washington Examiner (12/11, Lawler) reported the Federal Reserve announced last week it “would keep their interest rate target steady, an acknowledgment of the improved economic outlook after the central bank cut rates three times this year.” The Examiner added, “the central bank’s target for short-term rates will remain at 1.5% to 1.75%, only half of what Fed officials anticipated a year ago.” To the Examiner, “the difference reflects the major shift the Fed undertook in 2019, abandoning its plans for ‘normalizing’ interest rates and instead aiming for easier money.” The Fed’s “about-face followed harsh criticism from President Trump, who accused the central bank of undercutting the economy by tightening monetary policy.” Bloomberg (12/11, Matthews) said “investors are pricing additional cut by the end of next year, though odds of a cut lessened after a stronger than expected U.S. payroll report.”

Small Business Optimism Increased Sharply In November (12/10/2019)

NFIB’s Small Business Optimism Index saw a 2.3-point gain in November, the largest month-over-month gain since 2018. Seven of the Index’s 10 components advanced, in particular, earnings. NFIB Chief Economist William Dunkelberg was quoted saying, “This historic run may defy the expectations of many, but it comes as no surprise to small business owners who understand what a supportive tax and regulatory environment can do for their companies. ... As the two-year anniversary of the Tax Cuts and Jobs Act’s passage approaches this month, small businesses, the world’s third largest economy, are using those savings to power the American economy.”

Business Climate

Trump Administration Rolls Back Obama-Era “Joint Employer” Rule (01/14/2020)

The New York Times (1/12, Scheiber) reported the Labor Department on Sunday announced a new rule on “joint employment” that could make it harder for workers to sue “large companies for wrongdoing by contractors or franchisees.” Under the new rule, “which will take effect in March, employees of a fast-food franchise like a McDonald’s restaurant, for example, may struggle to win a legal claim against the parent company if a franchisee violates minimum-wage and overtime laws.” The rule “effectively replaces a more labor-friendly Obama-era approach that the Trump administration withdrew in 2017, one of several departures from the previous administration in the area of employment and labor law.”

Unemployment Rate Remains At Historic Low; Women Now Make Up Majority Of US Workforce (01/14/2020)

The AP (1/10) reported the Labor Department announced Friday that employers “added 145,000 jobs in December and the unemployment rate held steady at 3.5%,” which the AP says “signal[s] that the job market remains strong at the start of 2020 even if hiring and wage gains have slowed somewhat more than a decade into an economic expansion.” The AP added that “annual wage growth fell in December to 2.9%, down from an annualized average of 3.3% a year earlier, a possible sign that some slack remains in the labor market and that unemployment could fall even further from its current half-century low.” According to the AP, “The picture of a slowly-but-steadily improving economy – plus low inflation – likely gives the Federal Reserve comfort in keeping interest rates low.”

Economists Sound Warnings About Economy (01/14/2020)

The New York Times (1/8, Tankersley, Smialek) reported that “among the thousands of economists gathered for the profession’s annual meeting” last weekend, “there was little celebration” of President Trump’s “economic policies, even though unemployment is at a 50-year low, wages are rising and the economy is experiencing its longest expansion on record.” They raised warnings about Trump’s “trade war, about government budget deficits and, repeatedly, about the inability of central banks to fully combat another recession should one sweep the globe anytime soon.” The Times said that “underlying their sense of foreboding was a widespread sentiment that the current expansion is built on a potentially shaky combination of high deficits and low interest rates – and when it ends, as it is bound to do eventually, it could do so painfully.”

US December Payrolls Up Less Than Expected, But Economists Still See Stable Picture (01/14/2020)

Reuters (1/10) reported US job growth “slowed more than expected in December, but the pace of hiring remains more than enough to keep the longest economic expansion in history on track despite a deepening downturn in a manufacturing sector stung by trade disputes.” Fannie Mae Chief Economist Doug Duncan said, “The bottom line: it came in a little under consensus but still, there are more jobs than required to hold the unemployment rate constant over the long term. Average hourly earnings continue to grow and the work week is stable. It kind of lines up with most of the commentary written by the Fed and others that the economy is perking along at something like trend growth, or a little above trend growth, so there aren’t any real dangers here.”

Jobless Claims Edge Lower (01/07/2020)

Reuters (1/2, Lange) reported, “the number of Americans filing claims for jobless benefits edged lower last week, a positive signal for the US labor market amid recent signs that new claims may be trending slightly higher.” The Labor Department said “initial claims for state unemployment benefits decreased 2,000 to a seasonally adjusted 222,000 for the week ended Dec. 28,” while “economists polled by Reuters had expected 225,000 new claims last week.”

Fed Report: 57 Percent Of Small Businesses Reported Revenue Growth In 2018 (01/07/2020)

Forbes (1/3, Arora) reported the Fed’s Small Business Credit Survey found that 57 percent of small businesses “reported that they experienced revenue growth and more than one-third had added workers to their payrolls in 2018.” Startups saw the highest headcount gains along with companies with five or more workers, over $1 million annual revenue, and younger “decision makers.” Despite higher revenue, “the percentage of firms operating at a profit remained unchanged.” Moreover, 73 percent of respondents “reported their costs had increased in the prior 12 months although more than half of these businesses raised their prices to cover those costs.”

Small Business Marketing

Articles Highlight Tax Deductions For Self-Employed, Small Business Owners (01/14/2020)

U.S. News & World Report (1/3) contributor Maryalene LaPonsie discussed “self-employment tax deductions and benefits to claim,” such as retirement savings, insurance premiums, office supplies, credit card and loan interest, phone and Internet costs, start-up costs, continuing education, advertising, and self-employment taxes, among others.

Bank-Fintech Collaborations Focus On Servicing SMB Customer Needs (01/14/2020)

PYMNTS (1/7) reported open banking and FI-fintech partnerships are “the new norm for financial institutions around the world looking to upgrade their offerings for small businesses (SMBs).” SBM Bank’s collaboration with PayNearby will “ready” India for open banking. Several FIs, including Huntington National Bank and Judo Bank, are working with SaaS firms to “augment their corporate and small business lending capabilities.”

House Passes Bills To Help Ex-Prisoners Start Businesses (01/14/2020)

Law360 (1/12, Subscription Publication) reported, “The U.S. House of Representatives has passed two bipartisan bills that would offer entrepreneurship training and mentorship to people leaving federal prisons with the goal of reducing recidivism by helping former inmates gain employment and overcome the stigma of a criminal record.” The pair of legislative measures “would direct the Small Business Administration’s nonprofit partners to provide training for current prisoners and mentorship for former prisoners. The bills do not authorize new funding but would allow the government to reimburse nonprofit partners for the classes and courses they provide, with priority for people set to leave prison within 18 months.”

Tax Advice For Entrepreneurs (01/07/2020)

Accountant and entrepreneur Bryce Welker offered tax advice for entrepreneurs in Forbes (1/6, Council). Welker stated, “Of small business owners surveyed by the National Federation of Independent Business, 14% said that taxes were the single most important problem they faced, with many others placing it in their top three.” Welker stressed the importance of proper documentation and bookkeeping in order to find and claim deductions more easily.

Stengel: Online Lenders Offer Much To Small Businesses, Female Entrepreneurs (01/07/2020)

Forbes (1/2) contributor Geri Stengel said female entrepreneurs “are dissuaded from applying for credit, ask for less financing than men do, are approved less often, and pay more for credit.” Seeing a “market opportunity, an array of [online] alternative financing startups are using technology to make more financing options – not just debt – available to entrepreneurs and small business owners.”

How SaaS Companies Are Evolving, Implications For 2020 (01/07/2020)

Inc. Magazine (12/31, Hall) discussed how software as a service (SaaS) companies are evolving and that “the SaaS movement is far from over.” The article says that ServiceNow, Salesforce, and Workday in 2019 “emerged as industry leaders, a hierarchy that stuck until another now-leader came along: Square.”

Wages and Benefits

Subminimum Wage Workers Receiving Extra Attention Amid Widespread Increases For Others (01/14/2020)

According to the New York Times (1/9, Hassan), recent minimum wage increases have not benefited tipped workers as much as other hourly workers. Even other subminimum wage workers – such as au pairs – make nearly double the $2.13 required for tipped workers. That’s why the current debate over minimum wage is “calling attention to how many workers are still scraping by with subminimum wages.”

Reuters/Ipsos Poll: 64% Would Support A Wealth Tax (01/14/2020)

Reuters (1/10, Schneider, Kahn) reported, “The idea of imposing a wealth tax on the richest Americans has elicited sharply divergent views across a spectrum of politicians, with President Donald Trump branding it socialist and progressive Democratic presidential contenders Senators Elizabeth Warren and Bernie Sanders prominently endorsing it. But it may have broad public support, according to a Reuters/Ipsos poll that found nearly two-thirds of respondents agree that the very rich should pay more.” According to Reuters, “Among the 4,441 respondents to the poll, 64% strongly or somewhat agreed that ‘the very rich should contribute an extra share of their total wealth each year to support public programs’ – the essence of a wealth tax.” Reuters added that “while support among Democrats was stronger, at 77%, a majority of Republicans, 53%, also agreed with the idea.”

Research Suggests Correlation Between Increase In Minimum Wage And Decline In Suicide Rates (01/14/2020)

The Washington Post (1/9, Rosenberg) reported a new research paper “suggests a correlation between an increase in the minimum wage and declining suicide rates among adults ages 18 to 64.” Emory University researchers “analyzed monthly data from all 50 states and the District of Columbia between 1990 and 2015.” The paper, “published in the Journal of Epidemiology & Community Health, found that state-level increases of $1 in minimum wage corresponded with a 3.4 percent to 5.9 percent decrease in the suicide rates of people with a high school diploma or less in that age group.”

Minimum Wage Hikes Go Into Effect In Several States (01/07/2020)

The AP reported on several states’ minimum wage increases. In Maine (1/1), the “minimum wage is going up from $11 to $12 per hour effective New Year’s Day.” This is the “fourth annual increase in Maine under a ballot measure approved in 2016 when the state’s minimum was $7.50 an hour.”

Warren Plan Would Raise Minimum Wage As Part Of Effort To Aid Disabled US Workers (01/07/2020)

Reuters (1/2, Becker) reported Democratic presidential candidate Sen. Elizabeth Warren (MA) “said on Thursday that raising the minimum hourly wage to $15 and ending a program that allow[s] employers to pay disabled workers much less than the minimum would be among steps she would take to ensure financial security for individuals with disabilities.” Warren “detailed the proposals as part of a larger plan to protect individuals with disabilities.”

WPost Analysis: Minimum Wage Hikes Driving Pay Gains In US (01/07/2020)

The Washington Post (1/2, Van Dam, Siegel) reported that the “lowest-paid workers are seeing their paychecks rise at the fastest pace in more than a decade.” According to the Post, while “the Trump White House and Washington policymakers have touted the tight labor market as the main engine driving gains for the working class...a Washington Post analysis of Labor Department data suggests that paychecks also grew because of a nationwide movement of rising minimum wages in various states and cities over the past couple of years. ... Policies that increase the minimum wage are a ‘really meaningful part of wage growth for low-wage workers,’ said Heidi Shierholz, senior economist at the Economic Policy Institute. ‘That is absolutely, undeniably true.’”

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