NFIB Weekly NewsLeading the News Optimism Index Reaches Second-Highest Level In SBET History. (08/14/2018)
NFIB’s Small Business Optimism Index marked the second highest level in 45-year history of the Small Business Economic Trends (8/14) survey in July. The SBET hit 107.9, rising to within 0.1 point of the July 1983 record high of 108. The July 2018 report also set new records for reports of job creation plans and job openings. NFIB President and CEO Juanita Duggan was quoted saying, “Small business owners are leading this economy and expressing optimism rivaling the highest levels in history. ... Expansion continues to be a priority for small businesses who show no signs of slowing as they anticipate more sales and better business conditions.” NFIB Chief Economist Bill Dunkelberg was quoted saying, “Despite challenges in finding qualified workers to fill a record number of job openings, they’re taking advantage of this economy and pursuing growth.”
US Firms See Large Profits Surge Amid Tax Cuts, Healthy Economy. (08/07/2018)
On its front page, the Wall Street Journal (8/5, A1, Gryta, Subscription Publication) credited lower tax rates and a healthy economy for a surge in profits at the nation’s largest companies. According to Thomson Reuters, in the three month period ending in June, profits at S&P 500 companies increased an estimated 23.5%.
Cincinnati Enquirer (8/5), Small Business Administrator Linda McMahon wrote that “in December, President Donald Trump signed the Tax Cuts and Jobs Act into law,” meaning “most small businesses will now be able to deduct 20 percent off their business income in addition to having their taxable income taxed at lower rates,” and, “for the first five years, they’ll be able to write off investments in new equipment the year the investment is made.” McMahon added, “workers’ pay is improving, too” as a result of the tax cuts. She writes, “In surveys done by the United States Chamber of Commerce, CNBC, NFIB, and the National Association of Manufacturers, members report their highest-ever levels of optimism.” McMahon said, “this truly is a golden age for small business,” citing unemployment rate, wage and job creation statistics to demonstrate the positive impact of tax reform on the economy.
Small Businesses Turning To Tech To Streamline Operations, Not Replace Human Labor. (07/31/2018)
CNBC (7/29) reported that small businesses are investing more money in technology “to streamline operations.” However, contrary to the common misconception that increased use of technology will replace the need for human labor, data from the NFIB Research Center shows that “36 percent of small companies were not able to fill open positions in June, matching the survey’s record high from November 2000.” Moreover, although “mastering technology can be a challenge even for businesses that were themselves born from tech platforms,” some small business owners accepting the need for change and “embracing tech solutions to make life easier for themselves and their employees.”
The Hill (7/17, Wheeler) reported that the Administration rescinded a “controversial Obama-era rule” that would force employers to disclose the hiring of outside consultants to counter union organizing efforts. Labor Department Office of Policy deputy assistant secretary Nathan Mehrens was quoted saying, “By rescinding this Rule, the Department stands up for the rights of Americans to ask a question of their attorney without mandated disclosure to the government.” In November 2016, a federal court blocked nationwide implementation of the rule, which “marked a win for the National Federation of Independent Business, which challenged the rule, arguing it violated employers’ First Amendment rights to free speech and would prevent employers from seeking legal counsel.”
NFIB Pleased With President Trump’s Supreme Court Nomination Of Brett Kavanaugh. (07/17/2018)
The White House (7/10) last Tuesday released a “What They Are Saying” round-up on responses to President Trump’s nomination of Brett Kavanaugh to the US Supreme Court. The round-up quotes a statement from NFIB President and CEO Juanita Duggan: “Judge Kavanaugh has a proven record of interpreting the U.S. Constitution according to its original meaning and has ruled consistently against regulatory agencies whose interpretation of the law exceeds its statutory authority … Every small business owner has a stake in the next Supreme Court Justice, and we support the nomination of Judge Kavanaugh.”
Business Climate Gallup: Small Business Owners’ Optimism At Record Level. (08/14/2018)
The Washington Times (8/8, Harper) reported that “US small-business owners are more optimistic now than at any point in the 15-year history of the Wells Fargo/Gallup Small Business Index.” The index score “stands at 118 – besting the record-high of 114 in 2006.” According to the survey, “78 percent of the owners now rate their current financial situation as ‘good,’” and “another 77 percent expect their cash flow to be good in the next 12 months.”
Inflation Expectations Rise As Companies Raise Prices To Meet Rising Costs. (08/14/2018)
Bloomberg News (8/10, Smialek, Boesler) reported that “American companies plan to hike prices as their input costs creep higher,” calling the trend “a sign that businesses have faith consumers will keep shopping even as products become more expensive.” Through the current economic expansion, many businesses have argued that “customers will abandon them if they charge more, and it’s become an often-blamed reason for low overall inflation” such as Flowers Foods, the CEO of which is quoted saying his company will “address these inflationary pressures” by “aggressively working to capture greater efficiencies and cost reductions.”
Bloomberg News (8/11, Mayeda) reported President Trump tweeted late Friday that NAFTA renegotiations with Mexico are “coming along nicely,” and “that incoming Mexican president Andres Manuel Lopez Obrador ‘has been an absolute gentleman.’” Trump “had harsher words for Canada,” saying in the tweet that the country “must wait. Their Tariffs and Trade Barriers are far too high. Will tax cars if we can’t make a deal!” According to Bloomberg, Trump’s remarks hinted “at his preference for bilateral negotiations” and “highlight[ed] the goodwill the U.S. and Mexico have enjoyed since Obrador was elected in July.” Meanwhile, “relations with Canada have been tense since June’s Group of Seven meeting in Quebec, when Trump renounced support for the summit’s communique and took parting shots at Canadian Prime Minister Justin Trudeau for promising to stand up to U.S. tariffs.”
Wall Street Journal: Spending, Not Tax Cut, Is Responsible For Growing Deficit. (08/14/2018)
In an editorial, the Wall Street Journal (8/10, Subscription Publication) argued that rising deficits are not a result of the tax cuts, but due to an increase in spending. The Journal explained tax revenues in July were actually up $26 billion, while the $143 billion jump in spending was due to entitlement programs including Medicare, Medicaid and Social Security. The editorial also stated that the US collected a record amount of tax revenue in April 2018.
Amid Job Growth, Some Industries Struggle To Fill Openings. (08/07/2018)
Axios (8/5, Atkinson) reported that while the nation is “in the midst of its longest-ever streak of job growth, some American industries are having problems finding workers to fill their openings.” While many of the industries in question “pay well and provide ample benefits,” they are “often physically demanding or mentally stressful — often a combination of both — leading many millennials, who are likely to be more educated than the generations before them, to seek employment in other sectors.”
Freeland: Canada “Very Keen” On Wrapping Up NAFTA Talks. (08/07/2018)
Reuters (8/4, Ljunggren) reports Canada is “very keen” on concluding talks to renegotiate NAFTA as soon as possible, Foreign Minister Chrystia Freeland said Saturday, “amid signs of progress after months of delays.” Asked whether an August deadline was realistic after a Mexican official “expressed optimism that some kind of agreement could be reached by the end of the month,” Freeland told reporters, “I and Canada are very, very keen to get it done as quickly as possible.”
Small Business Marketing Article Lists Three Ways To Increase Sales On Amazon. (08/14/2018)
Business 2 Community (8/8, Kelly) reported, “We spoke with three Amazon experts to discover what they feel are creative ways to succeed in the marketplace, even if it means thinking outside the box.” The experts said sellers should add an “Available on Amazon” button, continuously optimize product pages, and balance consistency with creativity. The article said these are “what made the top sellers stand out in a marketplace jungle filled with thousands of competing products.”
Study Finds Products With More Content On Amazon Outrank Competitors. (08/07/2018)
Chain Store Age (8/2, Amato) reported that according to a study from Salsify, products with more robust content “not only outrank merchandise with less content a majority of the time,” but “they are also the most frequently purchased items.” The study found “products with significantly more reviews will convert at a higher rate and outrank its top competitor 58% of the time.” The same is true for listings “with images (53%), and those with bullets (51%).” In addition, “Product pages with top-tier Amazon sales ranks have 64% more images, on average.”
Small Business Owners Face Marketing Issues. (07/31/2018)
MarketersMEDIA (7/25) reported Capital One Spark Business recently released data indicating that “76 percent of small and local business owners face problems when it comes to marketing their business.” The research also showed that 39 percent of respondents “say that they haven’t conducted any marketing activities in the past six months.”
Retailers Work To Attract Big Advertisers To Compete With Amazon Ad Revenue. (07/31/2018)
In an article about retailers “working aggressively to attract big advertisers to their websites in a bid to drive sales,” Reuters (7/26, Thomasson, Naidu) reported Amazon and Alibaba “pioneered replicating” supermarkets’ strategy of placing products in the busiest sections of their stores “on their websites by mining data to target advertising at selected customers or groups. Amazon ad revenue alone could jump to $6.6 billion by 2019 from $2.8 billion last year, according to JPMorgan.”
List: Seven Factors For Ranking Highly On Amazon. (07/24/2018)
Writing for Forbes (7/18), Edkent Media co-founder and managing director Kenny Tripura listed seven factors for ranking highly on Amazon. Tripura saidd the key ranking factors include Amazon’s sales rank, customer reviews, answered questions, conversion rate, customer satisfaction and retention, product listing completeness, and relevancy. Tripura added, “Brushing up on these ranking factors is important regardless if you’re an Amazon newcomer or experienced veteran.”
SBA 7(a) Loans Increasingly Supporting Minority Business Owners. (07/17/2018)
Forbes (7/12, Arora) reports that Small Business Administration 7(a) loans have reached an all-time high, with nearly one-third going to minority business owners. Five years ago, the figure was at 27%. This indicates “growth in entrepreneurship among Hispanic, Asian, and African American populations.” SBA loans “are a good source of capital for startups and companies with little credit history or less than stellar credit ratings.”
Wages and Benefits Treasury Department Proposes New Tax Rules For Pass-Through Businesses (08/14/2018)
Reuters (8/8, Morgan) reports that on Wednesday, the Treasury Department “proposed tax regulations for a new 20 percent income tax deduction for owners of businesses organized as pass-through entities, including rules to prevent the measure from becoming a tax loophole for wealthy Americans.” The newly-proposed rules “are intended to provide everything pass-through owners need to comply with the Republican Tax Cuts and Jobs Act, a sweeping overhaul of the US tax code that President Donald Trump signed into law in December.” “Pass-through” businesses are defined as small businesses without shareholders that “pass profits through to their owners as personal income.” Treasury Secretary Steven Mnuchin is quoted on the proposed rules, saying, “The pass-through deduction is an important tax cut for small- and mid-size businesses, reducing their effective tax rates to their lowest levels since the 1930s. This 20-percent deduction will lead to more investment in US companies and higher wages for hardworking Americans.” According to Reuters, “Trump’s tax overhaul provided permanent tax relief to corporations, which saw their tax rate slashed from 35 percent to 21 percent and an end to US taxes on much of their foreign profits.” However, “Pass-through owners got only temporary relief under the law’s individual tax provisions, which are due to expire after 2025.”
Retail Pay Not Rising With Minimum Wage. (08/07/2018)
In a piece on how retailers’ increases in minimum wages and starting pay have not generally resulted in higher pay for experienced workers, the Washington Post (8/2, Bhattarai) said retailers “have made headlines for raising their minimum hourly wages in quick succession – CVS to $11, Costco to $13, Target to $15 by 2020.” But “the average hourly wage paid to retail workers dropped to $18.58 in June, from $18.65 a month earlier.” Grant Thornton Chief Economist Diane Swonk said, “Managers are being squeezed out. ... Companies are taking what used to be high-skilled, high-paid jobs and turning them into lower-skilled, lower-paying jobs.” According to the Post, “That shift, she said, has been particularly pronounced in retail, where companies are making do with fewer workers to offset narrowing profit margins. The rise of sites like Amazon.com have meant traditional retailers have had to slash prices – and costs – to keep up.”
Opinion: People With Disabilities Deserve Fair Pay. (08/07/2018)
Neil Romano, chairman of the National Council on Disability, wrote for The Hill (7/31) that an “archaic provision” in the Fair Labor Standards Act called 14(c) “permits employers to obtain a certificate from the U.S. Department of Labor and pay people with disabilities in their workforce less than the minimum wage,” and today, “approximately 164,000 Americans with disabilities receive sub-minimum wages.” He argued, “We can no longer afford an economy that leaves an entire group of people unemployed or underutilized.”
Democratic States Sue Administration Over Plans That Skirt ACA Rules. (07/31/2018)
Bloomberg BNA (7/26, Alder) reported that 11 states and Washington, DC, led by New York Attorney General Barbara Underwood (D) and Massachusetts Attorney General Maura Healey (D), are suing the Labor Department, arguing that it “violated federal rulemaking procedures when it expanded small business access to group health insurance.” The attorneys general also allege that the final rule “violates the Affordable Care Act and federal employee benefits law,” and “say it is an attempt by the Trump administration to dismantle the ACA.”
Congress Eyeing Biggest Retirement Savings Changes In Over A Decade. (07/24/2018)
The Wall Street Journal (7/17, Rubin, Tergesen, Subscription Publication) reported that lawmakers are seeking bipartisan agreement on legislation that could result in the biggest changes to the nation’s retirement savings since 2006. Lawmakers are starting with the Retirement Enhancement and Savings Act, or RESA, which is sponsored in the Senate by Finance Committee Chairman Orrin Hatch and Ranking Member Ron Wyden. The bill has support from both financial firms and AARP, which called it “an important step to improving retirement policy.” House Republicans, who plan to make retirement savings part of their “Tax Reform 2.0” package, may take some parts from the legislation and add their own elements.
The New York Times (7/13, Cohen) reports, “Corporate profits have rarely swept up a bigger share of the nation’s wealth, and workers have rarely shared a smaller one.” During the Great Recession “and much of its aftermath, when many Americans were grateful to receive a paycheck instead of a pink slip, jobs and raises were in short supply.” But now, “complaints of labor shortages” are common and “workers have some leverage to push for more. Yet many are far from making up all the lost ground” as wages remain little improved.
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