FACT CHECK: Did Small Business Optimism Just Hit A Record High?

David Sivak | Fact Check Editor

President Donald Trump claimed Tuesday that optimism among small businesses has never been higher.

Verdict: False

Polls show small business optimism near, but not quite at, record highs.

Fact Check:

Trump touted the state of the economy at a luncheon celebrating the National Federation of Independent Businesses (NFIB), the largest small business association in the U.S.

“We’re here today to talk about small business and the incredible progress we’re making as a country,” said Trump. “We really have made unbelievable progress. And we’re making with the help and support of our wonderful friends at the NFIB.”

He cited small business optimism as an example. “You saw the poll that was recently taken – small business poll. The most optimistic in history, in the history of the poll,” Trump said.

It’s not clear which poll Trump was referring to, and the White House did not respond to a request for comment.

The NFIB has maintained an optimism index for decades, and in the latest survey, the index hit 107.8, a hair shy of the record 108 reached in July 1983. “The Small Business Optimism Index increased in May to the second highest level in the NFIB survey’s 45-year history,” reads the May report.

The NFIB sends small business owners a questionnaire each month and then calculates an index based on 10 survey indicators, including plans to hire or invest in the business, as well as expectations about sales and economic conditions more broadly.

Gallup has followed a similar methodology since it started tracking small business optimism in 2003. Some of the highest ratings have occurred under the Trump administration, the polling agency found, but optimism still remains below a record set in 2006.

PNC Bank reported in April the highest level of optimism since it began polling 15 years ago, but it surveys small to mid-size businesses with sales up to $250 million a year. (By comparison, Gallup interviews businesses earning less than $20 million annually, and the typical NFIB business grosses around $500,000 a year.)

Some surveys don’t have as long of a track record.

Although the U.S. Chamber of Commerce reported in May the highest level of small business optimism yet, it only started polling in 2017.

CNBC started an index around the same time. Optimism reached a record in the first quarter of 2018, and then dipped slightly in Q2 amid concerns over trade. “Confidence among America’s small-business owners remains near an all-time high, despite concerns about how the Trump administration’s trade policies might impact businesses in the coming months,” CNBC reported.

A Bank of America survey rated small business optimism in April as the highest since 2015.

NFIB credits tax reform for current optimism, in addition to a deregulatory environment under the Trump administration. The index began to spike ahead of the 2016 presidential election, rising from 94.1 in September to 105.8 in December. From there, optimism continued to ride near record highs.

When the NFIB averaged the index across all 12 months of 2017, it found that optimism on an annual basis had never been higher. “2017 was the most remarkable year in the 45-year history of the NFIB Optimism Index,” NFIB President and CEO Juanita Duggan said in January.

Six months later, the monthly index continues to flirt with all-time highs.

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David Sivak

Fact Check Editor
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