A year ago, Donald Trump’s presidential second coming triggered the largest increase on the marquee measure of US small business sentiment in history, a staggering 8ppt surge.
Across the final two months of 2024, the gauge rose more than 11ppt, easily eclipsing the jump seen around Trump’s first election in late 2016.
The figure below gives you some context for the magnitude of the euphoria professed by poll respondents. And how that euphoria’s faded. (As of October, the gauge was 7ppt off the post-election highs.)
To be sure, “small” is a relative term. These aren’t all “mom and pop” shops. It’s not a survey solely comprised of local dive bar owners. But the poll’s widely-cited and well-respected. In short: It’s representative.
I’ve had occasion to know a lot of small business owners in America over the past two decades, and with some exceptions, they’re highly amenable (and that’s me being polite) to a standardized GOP stump speech centered around tax cuts and flattery.
I don’t want to offend anybody, so I won’t elaborate, but suffice to say Trump’s pitch went over well with a lot of small business owners, and it’s a good bet they came out for him on Election Day.
Note that the headline NFIB gauge was below the long-term average for the entire period between 2022 and the 2024 election, a stretch defined by high inflation and an onerous increase in the cost of capital for smaller firms without access to public markets.
It took Trump’s reelection to push the index back above the long-term average. Fast forward 12 months, and the NFIB gauge is barely hanging on, as shown above.
That’s the context — and yes, I’ve thoroughly buried the lede, as is my wont — for the 120,000 net job loss reported among businesses with fewer than 50 employees by ADP on Wednesday.
That loss was entirely responsible for the worst headline ADP readout since March of 2023. Businesses with 50 or more employees added 90,000 jobs in November, the report showed.
As the figure above shows, that 120,000-job loss for small businesses in November counted as the largest one-month layoff in 15 years excluding the chaos around the onset of the pandemic in 2020.
Over the past four months, businesses with fewer than 50 employees have shed 222,000 jobs on net. Look back to June, and the tally swells to 264,000.
It’s fair, I reckon, to suggest small businesses harbored a bit of misplaced optimism about “Trump 2.0.” And that some may now have buyer’s remorse.
Tax breaks do help, and deregulation is nice, but what would really, really help me (running a small financial firm) is National, Single-Payer health coverage. If my firm did not have to pay for that benefit for my 11 employees, I could hire another person (with experience!) which, ironically in this context, I really want/need to do. It boggles my mind that so many small business (as in the mom and pop variety) aren’t more supportive of the idea.
Farmers and ranchers and small oil companies thought he was their savior. We’ll see.
The “Special K” effect is not limited to households.
Small businesses
– Are price takers, including on tariffed goods, with no scale economies
– Borrow at the highest rates
– Have few good options for healthcare
– Are not diversified
– Have the least ability to cut heads (each person is a large pct of total)
– Are less tech-savvy with less scope for AI productivity miracles
. . . thus are losing share to large companies in today’s economy.
And, yes, as a group small business owners are reflexively right-wing and don’t seem to grasp that MAGA couldn’t care less about Reaganite precepts.
H-Man,he is unable to identify with the common person when it comes to economics. Yesterday he claimed that affordability was something created by fake news since everything is now affordable. That Tennessee congressional race may be the proverbial canary in the coal mine.