NFIB Weekly News
Leading the News
Small Business Optimism Lower In September. (10/10/2017)
The NFIB (10/9) reported that its Index of Small Business Optimism fell from 105.3 in August to 103 in September. The decline was prompted by a sharp dip in expected sales. The percentage of small business owners expecting improved sales over the next three months fell from 27% in August to 15% in September, while the number of owners who believe the present is favorable for expansion fell by 10 points. NFIB President and CEO Juanita Duggan said, “The temptation is to blame the decline on the hurricanes in Texas and Florida, but that is not consistent with our data.” Duggan added, “Small business owners across the country were measurably less enthusiastic last month.” Meanwhile, NFIB Chief Economist Bill Dunkelberg said, “The drop-off was consistent around the country regardless of region, and it’s likely that members in Florida and Texas were underrepresented in this survey because of the obvious disruptions.” He noted, “The adjusted average employment change per firm dipped to -0.17, which is a significant drop in hiring activity.”
Trump Touts Tax Plan In Speech To Manufacturers.
In a speech to manufacturers, President Trump praised the proposed tax reform framework. The Hill (9/29, Jagoda) reported that in the speech, Trump described the plan as a “giant, beautiful, massive, the biggest ever in our country, tax cut,” and said “we need a tax code that encourages companies to stay in America, grow in America and hire in America.” The Hill added that “Trump spoke about several aspects of the plan that are of particular importance to manufacturers,” including that it would “lower the corporate tax rate from 35 percent to 20 percent, and would lower the rate for so-called pass-through businesses to 25 percent.”
NFIB Survey: US Small Businesses Expanding At Strongest Pace Since 2006.
USA Today (9/26, Davidson) reported that American entrepreneurs “are moving ahead with investment and expansion plans that could juice economic growth.” 32% of small businesses “are planning capital outlays in the next three to six months, the strongest reading since 2006,” according to the survey, “and 27% say the next three months is a ‘good time to expand,’ the largest share in 13 years.” An additional survey by the National Association for Business Economics “predicts that business investment overall – by small and larger companies – will grow 4.4% this year, up from their 3% median estimate in December.” USA Today pointed out that “businesses that expand, buy new equipment or build new structures typically hire workers to operate the machines or occupy buildings, while the factories that make the products generally need to staff up as well.” In addition, the NFIB survey found that “some companies are splurging on labor-saving equipment because they can’t find workers,” noting that “with unemployment at a low 4.4%, nearly nine of 10 small businesses that were hiring last month said there were few or no qualified applicants.”
Cassidy: “48 Or 49” Republicans Back Plan To Replace ACA With Block Grants.
The Washington Times (9/17, Howell) reports that with time running out to replace the Affordable Care Act with just 50 votes, Senators pushing a plan to replace the law with state block grants “are making real noise...insisting they are just one or two votes shy and that President Trump can nudge their last-gasp bill to victory.” Sen. Bill Cassidy, who co-wrote the legislation with Sen. Lindsey Graham said Friday, “We are thinking that we can get this done by Sept. 30.” Cassidy “said his informal whip count stands at ‘48 or 49’ Republican votes.” However, Sen. Rand Paul “announced Friday that he is staunchly opposed to the bill, lengthening the odds of success.” Democrat leaders, meanwhile, “are rallying Obamacare’s defenders to stamp out a revived threat to their signature law.” In a tweet over the weekend, Senate Minority Leader Schumer wrote, “Trumpcare is back & Senate GOP has until Sept 30 to pass their bill. ... We need your voices more than ever!”
Hatch: Big Six “Will Not Dictate” Finance Committee Approach To Tax Reform.
Reuters (9/14, Morgan) reports, “In a defiant statement coming as Republican leaders from the Trump administration and Congress prepare to unveil their tax reform framework,” Senate Finance Committee Chairman Orrin Hatch “said his panel would not be ‘anyone’s rubber stamp’ and that its legislation would reflect the consensus views of its members.” Referring to the “‘Big Six’ negotiators from the White House, Senate and House of Representatives,” Hatch added, “The group...will not dictate the direction we take in this committee. ... The Finance Committee will not be bound by any previous tax reform proposal or framework when we start putting our bill together.”
Small Business Optimism Continues “Historically High” Run.
In its latest Small Business Optimism Index, the NFIB reports that small business owners are “planning to make capital expenditures in the next three to six months” at their “highest level since 2006.” NFIB President and CEO Juanita Duggan called it “a sign of economic health that we’ve been expecting based on the soaring optimism that began last year,” adding the growth in capital investments has followed “higher employment activity.” The Index grew to 105.3, a gain of 0.1 points as five components of the Index increased overall and five declined overall, keeping “intact a string of historically high performances extending back to last November.” NFIB Chief Economist Bill Dunkelberg said the August numbers are indicative of a growing economy as they are “a real sign of strength, and it will be interesting to see if the August result becomes a trend.”
White House Seeking Fed Chair That Supports Deregulation. (10/10/2017)
Bloomberg News (10/6, Torres, Jacobs, Mohsin) reported “the White House team leading the search for the next generation of Federal Reserve leaders is seeking contenders willing to roll back financial regulations, but also with experience in monetary policy and the consensus-building skills to run a large organization, according to three officials familiar with the process.” The article added President Trump has a “shortlist of five names for Fed chair: former Fed Governor Kevin Warsh, Stanford University economist John Taylor, current Fed Governor Jerome Powell, National Economic Council Director Gary Cohn and the current chair, Janet Yellen.”
Treasury Department Outlines Proposed Changes To Financial Rules.
Small Business Marketing
The New York Times (10/6, Hsu, Subscription Publication) said the Treasury Department released a report “taking aim at the Dodd-Frank Act” as it contained recommendations for “a vast reworking of Wall Street rules adopted in response to the financial crisis.” According to the Times, while “the ideas were welcomed on Wall Street, where banks complain that Dodd-Frank rules have needlessly hobbled growth,” consumer groups responded with “skepticism” to the suggestions that they view as “a dangerous relaxation of checks against a cavalier financial system.” The Times added that “some of the proposed overhauls would do away with a requirement for companies to divulge the pay ratio of chief executives to workers, streamline derivatives rules, and give companies more access to capital and investors more places to put their money.”
Trump To Promote Tax Reform Plan This Week.
The AP (10/6) reported President Trump will travel to Harrisburg, Pennsylvania this week to promote his tax reform plan. White House press secretary Sarah Sanders said that the plan “is really a jobs bill” that will create jobs and drive the economy.
Cohn Suggests Tax Cuts, Deregulation Will Spur 3 Percent GDP Growth. Bloomberg News (10/6, Philip) reported National Economic Council Director Cohn said that tax cuts and deregulation have driven the US economic growth, adding that the US “can have 3-plus percent growth with taxes and the regulation reform that we’re after now.”
Differing Priorities Among Republicans On Tax Reform.
Reuters (10/6, Becker, Morgan) reported congressional Republicans appear divided on President Trump’s tax reform plan. Lawmakers from high-tax states such as New York are seeking “some sort of compromise on repealing the deduction for state and local tax payments,” while others are questioning the elimination of the estate tax. Sen. Bob Corker (R-TN), Reuters noted, has said that he cannot support reform that adds to the federal deficit. Kevin Brady (R-TX), chairman of the House of Representatives’ tax-writing committee, said that there have been no changes to the framework, but added that he is “listening very carefully” to lawmakers’ concerns.
Commerce Department: US Second-Quarter GDP Up 3.1%, “Best Growth In Two Years.”
Dow Jones Newswires (9/28, Mitchell, Subscription Publication) reported “US economic output grew at a 3.1% annual rate in the second quarter, slightly stronger than previously thought and marking the best growth in two years.” Upon releasing the data, the Commerce Department “said stronger business spending – mainly in the form of farmers decreasing their stockpiles less than previously thought – led to the upward revision.” Dow Jones added, “the economy at its core remains stable, as steady job growth and a booming stock market encourage households to spend,” also noting that “consumers, accounting for more than two-thirds of economic demand, increased spending at a 3.3% rate in the second quarter.”
Trump To Announce Regulatory Rollbacks.
Bloomberg News (9/30, Dlouhy) reported President Trump will unveil new regulatory rollbacks, “followed by ‘Cut the Red Tape’ events at 10 federal agencies” which will spread the message that “reversing, delaying and rewriting rules is helping spur economic growth, jobs and innovation.” Office of Information and Regulatory Affairs administrator Neomi Rao said, “In the process of rolling back regulations, we’re really looking to find regulations that are no longer working, that are duplicative or ineffective.” The Administration “has begun rewriting and delaying a suite of rules” including regulations “governing carbon dioxide emissions and hydraulic fracturing,” and a DOL rule that sets “standards for brokers and dealers.” The Washington Times (9/30, Boyer) reported Rao said the President “will call attention to ‘the benefit that reform can have for ordinary Americans.’”
Facebook Security Head Warns Of Fake News Dangers. (10/10/2017)
Bloomberg News (10/7, Frier) reported that Facebook Chief Security Officer Alex Stamos “warned that the fake news problem is more complicated and dangerous to solve than the public thinks.” In several Twitter posts on Saturday, Stamos “cautioned about hoping for technical solutions that he says could have unintended consequences of ideological bias.” His “comments shed light on why Facebook added 1,000 more people [to] review its advertising, rather than attempting an automated solution,” Bloomberg says.
Digital Now Largest Ad Channel, Expected To Overtake Offline Sales By 2019.
Wages and Benefits
MediaPost’s Research Brief (10/5, Loechner) reported that MAGNA data show that digital ads have finally “overtaken TV” as the largest ad medium, although “offline” non-digital ads still have the largest spend. Digital ads should command $84 billion this year, up 16% from 2016, according to Marketing Charts, which published the MAGNA data. Research Brief says the trend line suggests digital ad sales will hit nearly $101 billion by 2019, passing offline sales expected to be around $93.5 billion that year.
Twitter Will Test Doubling Character Limit Of Tweets For Some Users.
The Drum (UK) (9/26, Stewart) reported that “Twitter has confirmed it is considering a move away from its hallmark 140-character limit, saying it will soon begin testing a 280-character limit for a select number of users across the world.” Twitter “stressed that the change will only apply to a ‘small group of users’ in countries where users are impacted by tweet ‘cramming,’” or the inability to make their languages conform to the character limit. Twitter said, for example, that “the increase won’t be trialed in Japanese, Chinese or Korean versions of the app.”
Facebook IQ Revamps Site As One-Stop Research Portal, With “Discovery Engine.”
AdWeek (9/12, Cohen) reports that Facebook IQ has revamped its website to create “an easy-to-access portal for all of its research,” including its “data, white papers and success stories on insights, marketing and measurement from Facebook, Instagram, Messenger and Facebook Audience Network.” A new Insights to Go “discovery engine” is designed to allow users “to filter, find and share relevant insights and data.” The feature also produces slides that “can be shared or downloaded, and the text contained within them can be copied and pasted.”
LinkedIn Survey Finds Members Engage With Brand Content That Helps Them.
Social Media Today (9/13, Hutchinson) posts an infographic that shows how professionals engage with content on the LinkedIn platform, based on that company’s own survey of some 9,000 of its members. LinkedIn’s infographic shows that companies and brands have nearly as good a chance of driving engagement at the levels of a LinkedIn member’s own peers if those brands share good content that cuts to the chase. To a LinkedIn member, “good” means “inspirational, relevant content that either makes [them] smarter or helps them perform better at their jobs.” Bucking the mobile trend, LinkedIn content is still consumed primarily on desktops or laptops.
LinkedIn Will Begin Serving Ads To Members On Third-Party Sites, Apps.
Advertising Age (9/6, Slefo) reported LinkedIn announced its Audience Network last week, which is designed to reach LinkedIn members on third-party apps and websites. The company said the network was tested by about 6,000 advertisers, who “saw an increase in unique impressions ranging between 3% and 13%.” LinkedIn said it “is working with ad exchanges like MoPub, Sharethrough, Rubicon, Google and Appnexus” and that “advertisers will be able to download performance reports that provide insights on clicks, impressions and engagement.”
Trump Tells Donors He Is Determined To Move Forward On Healthcare, Calls Schumer To Work On Deal. (10/10/2017)
Politico (10/8, Isenstadt) reported that President Trump told a group of donors in North Carolina “that he was determined to push forward on healthcare reform – but acknowledged that he was facing serious obstacles in doing so.” Trump “said he wanted to restart the talks” but “two people present for the remarks” said he “underscored the challenges of getting a majority of support for any legislation in the Senate, noting that there was a small group of GOP holdouts who had opposed the repeal efforts.” Several attendees said he “did not rule out the possibility of working with Democrats to get something done.” That followed a tweet on Saturday in which the President said he had called Senate Minority Leader Schumer “to see if Democrats wanted to work together on ‘a great HealthCareBill.’”
Labor Department: US Lost 33,000 Jobs Last Month Due To Hurricanes.
The New York Times (10/6, Cohen, Subscription Publication) reported the Labor Department announced the US economy “lost 33,000 jobs in September, the first monthly decline in employment in seven years,” which the Times attributes to “the impact of hurricanes that walloped Texas, Florida and neighboring states.” However, the Times acknowledged “economists discounted the discouraging report, describing it as a blip in a job market that was fundamentally strong.” According to the Times, “some of the good news released by the Labor Department – a drop in the jobless rate to 4.2 percent and a year-over-year gain in wage growth of 2.9 percent – may also have been skewed by weather disruptions.”
WSJournal Urges Court To Bolster Federal Arbitration Law.
In an editorial, the Wall Street Journal (10/1, Subscription Publication) urged the Supreme Court to hear challenges to an Obama-era National Labor Relations Board (NLRB) opinion which prohibits arbitration class-action waivers in employment contracts. According to the Journal, the court has repeatedly ruled that the Federal Arbitration Act preempts state laws and court rulings against forced arbitration, and urges the court to reinforce previous rulings on the issue.
Median Household Income Rose By 3.2% In 2016.
The Census Bureau said last week that the median US household income increased 3.2 percent in 2016 to $59,039, marking is second straight yearly increase “as the long-running economic recovery generated broad gains in prosperity,” the New York Times (9/12, A1, Appelbaum, Subscription Publication) reports. For the American middle class, the Washington Post (9/12, Long) says, 2016 was the “highest-earning year ever.” According to the Census Bureau, “the uptick in earnings occurred because so many people found full-time jobs – or better-paying jobs – last year.” The Post adds that the poverty rate “also fell to 12.7 percent, the lowest since 2007, the year before the financial crisis hit.” The Wall Street Journal (9/12, Leubsdorf, Subscription Publication) reports that the percentage of Americans lacking health insurance also declined from 9.1 percent in 2015 to 8.8 percent in 2016. USA Today (9/12, Davidson) says the Census Bureau report “underscores that in the final two years of the Obama administration, low- and middle-income Americans made noticeable progress after struggling in the early years of the economic recovery.”
Initial Jobless Claims Unexpectedly Down By 14K To 284K.
Bloomberg News (9/14, Chandra) reports the Labor Department announced initial jobless claims “unexpectedly settled back last week,” falling by 14,000 to 284,000 and “underscoring a resilient labor market even as the Atlantic hurricane season introduces added volatility to the figures.” Economists had predicted 300,000 new claims. The less-volatile four-week average “rose to 263,250 – highest since August 2016 – from 250,250.” Bloomberg says, “Applications for unemployment insurance last week were estimated for Florida, Georgia and South Carolina – states that were impacted by Hurricane Irma. Meanwhile, Texas reported an unadjusted 11,800 decrease in filings, following a Hurricane Harvey-related 51,683 surge in the week ended Sept. 2.”
Q2 Productivity Revised Up To 1.5%.
MarketWatch (9/7, Bartash) reported the Labor Department announced that it has revised second-quarter productivity upward to a 1.5% annualized rate of increase, from an original estimate of 0.9%, “though the long-term trend remained weak.” MarketWatch added, “The upward revision stemmed entirely from workers producing more goods and services. Output was revised up to show a 4% increase instead of 3.4%.” MarketWatch said, “Although productivity has risen four straight quarters, it’s only increased 1.3% over the past year,” whereas “productivity rose an average of 2.6% a year from 2000 to 2007. And since World War Two productivity has risen by an average of 2.1%” per year.