Highlights:
- The Trump presidency is driving optimism AND pessimism for local business owners
- Taxes are top of mind, while health care reform is a mixed bag
- Swings in SMB optimism could have big implications for the economy and jobs
As the political news cycle hangs on every movement of the new Trump Administration, small business owners across the country are also watching as key political and policy issues unfold. Confidence among Main Street entrepreneurs is an important indicator of where the economy may be heading, given the massive impact of local businesses in the U.S.
Turns out, the election of Donald Trump as the 45th U.S. president has an outsized impact on both confidence AND anxiety for small business owners, according to a new study of local merchants in all 50 states conducted by Womply. As part of the study, we asked respondents about their thoughts on key political and policy issues that affect small business, including health care, tax reform, immigration, minimum wage, and more.
Here’s what we found:
One big thing: Taxes
Both on the campaign trail and in his first 100 days in office, President Trump made tax reform a major priority. Small business owners have been watching with interest. According to our data, taxes are the policy area local business want changed above all, and it’s not even close. Fully 36% of our respondents said they want tax policy changed as their top priority, doubling the next-highest options: business compliance regulations (19%) and healthcare (18%).
Take a look:
Obamacare repeal: A house divided
One of the first actions of the incoming Trump presidency was to take swift action on another campaign promise: the repeal and replacement of the Obama-era Affordable Care Act (ACA, also known as Obamacare) as the nation’s health care law.
Health care is a complicated issue for small businesses. It ranks as the #6 worry in our Small Business Anxiety Index, and it cracks the top five worries for owners who are optimistic about business prospects this year. Policy is a different beast, however. Nearly 1 in 3 small business owners say Obamacare repeal would have no impact on their business, and as previously noted, only 18% say it’s the top policy issue they want changed.
Take a look:
As one would expect, reactions vary considerably when voting preference is factored in, revealing a stark political divide among small business owners. Consider:
- Small business owners who voted for Trump are 22x more likely than Hillary Clinton voters to say ACA repeal would have a very positive impact on their business.
- Clinton voters are 34x more likely than Trump voters to say ACA repeal would have a very negative impact on their business.
Voting preference: A confidence barometer
Nationwide, 41% of local business owners voted for Trump compared to 25% for Clinton. Voting preference has a profound impact on overall sentiment, with Trump’s election serving as a major catalyst for both optimism AND pessimism on Main Street.
Those who voted for Trump are significantly more optimistic than those who didn’t, and his election is a major source of confidence for optimists. Take a look:
On the flipside, Trump’s election is a source of major anxiety for the 13% of small business owners who report being pessimistic about prospects in 2017. Take a look:
Why does any of this matter?
The impact of political and policy issues on the collective psyche of small business owners is no small thing. As previously noted, confidence is a powerful economic catalyst for better or for worse, and the Trump administration is exerting tremendous influence on the overall sentiment of America’s 28 million small businesses.
Overall, small businesses are feeling good, with 70% reporting optimism about prospects this year. Subtle — or not so subtle — shifts in the political or economic environments could drastically change that favorable disposition, with incredible potential consequences on the economy and jobs. Here’s why:
- Optimistic owners are 3.5x more likely to hire and give raises this year than pessimistic ones.
- Conversely, pessimistic owners are 6.5x more likely to reduce staff and employee pay this year.
Clearly, swings in sentiment could have very positive or negative ripple effects, depending on which way the optimism quotient, well, swings. Let’s hope optimism remains high. It’s good for business — good for all of us.