Take Five: Soaring small business confidence is for real
Wayne Best, left, and Bill Dunkelberg are touring the country discussing small business and the state of the economy.
(page 1 of 3)
As part of their “Economic Road Show,” Bill Dunkelberg of the National Federation of Independent Business and Visa Inc.’s Wayne Best visited Madison recently, spreading good news about the U.S. economy and the state of small business. Dunkelberg, the NFIB’s chief economist, and Best, the head of business and economic insights for Visa, have their finger on the pulse of business — Dunkelberg because of the NFIB’s research into small businesses and Best because of how closely he tracks the trillion-dollar payments industry.
In the following Take Five interview, they explain why they are so bullish on the economy — “This is some of the best stuff we’ve seen in 45 years of talking to small businesses,” Dunkelberg notes — but also why the U.S. might fall short of the 4% growth of past expansions.
IB: Is the economic data really as good as it looks?
Dunkelberg: We’re in the second longest expansion in our history, and they [small businesses] played a major role in that, keeping us going for eight years when growth was slow, and then accelerating growth by 50%, from 2% to the 3% growth that we have now, which is massive and really accelerating us into the next few months, and we hope into the next few years. The message is really good across the board.
IB: I’ll put you on the spot — do you give President Trump credit for this?
Dunkelberg: I give all the credit to small businesses because they are the ones who get it done. What Trump’s election did was shock us all, and then in the minds of small business owners, at least a majority of them, apparently it meant a major change in the management team in Washington, D.C., which meant a whole different set of economic policies, very different than what the opposition was promising. They didn’t know immediately what the tax policy was going to be, or what was going to happen with trade or immigration or any of these things, but they felt it was going to be better than anything they would have had if the election had gone the other way.
IB: Wayne, what’s your main message?
Best: There are two messages. The first is related to the overall national economy doing extremely well with pretty much a full-employment condition. Everybody who wants to work is working. What we’re seeing now is stronger levels of growth nationwide, with very few exceptions. Spending growth is strong. The consumer is in a very good place right now. Their net worth is increasing. With the housing market continuing to do very well, we have very few people left who are underwater on their mortgage.
Again, the strongest point is we see very strong employment growth, and that’s very positive for the economy. It ends up resulting in a good amount of [consumer] spending that we’re seeing overall. They are doing very well, and that obviously bodes strongly for businesses, but when you have this level of confidence that consumers have, and the fact that they are working, their parents are working, their neighbors are working, and their friends are working, that bodes well for continued consumption and a broad level of economic growth.
IB: Bill, do you agree the strong consumer confidence has legs?
Dunkelberg: I do. Consumer confidence went up as business owner confidence went up, and interestingly, one of the questions the University of Michigan survey asked was: Do you think government policy is good, fair, or poor? The net percent that said ‘good’ turned positive in April for the first time since 2002, so consumers now think the government is doing the right thing. Now they see some of the policies and that makes them comfortable with making decisions out into the future — like buying cars and buying houses and starting new businesses.
IB: How would you assess the overall state of small business today?
Dunkelberg: Overall, it’s hard to find a time in the last 45 years when small business was doing better and felt better about the economy. Its major problem now, interestingly enough, is finding qualified workers rather than worrying about taxes or worrying about regulation, both of which have improved. So small business is running on all cylinders — a very powerful engine driving economic growth — and we expect it to continue through this year and into next year.
Best: The data certainly points that out. They are spending. In many cases, they are looking to expand their business. Some of the tax law changes that have just gone into effect, and with the immediate expensing of investments over the next five years, we might actually see a run up in spending or investing that actually occurs because that goes away after five years. It’s a really interesting duality we’re seeing with regard to both business and consumers. Bill and I have been doing this Road Show around the country for a number of years, and I always end up being the positive one because the consumer has done relatively well since the recovery began. The business confidence was very much down until November of 2016, and so I’ve been taking the good side and he comes up and gives the negative view. Now we’re actually going to be going around the country talking about a very different picture, which is important.