There is no doubt that the U.S. entered a new era on the 20th January with the inauguration of President Donald Trump. Policy has been putting American business and jobs first, something that has resonated well with businesses and the economy, resulting in an uptick in performance.
Across a number of measures, the world’s largest economy continues to perform well in 2017. After 81 consecutive months of job growth, a post-war record, the U.S. unemployment rate hit a 16 year low of 4.3% in June 2017. Stock market indices have reached all-time highs with the Dow Jones surging by 16%, S&P 500 by 13% and the NASDAQ by 18% in the first half of 2017. The nation’s housing market has also continued its long and gradual recovery following the financial crisis a decade earlier. Manufacturing has rebounded, even as auto sales have faltered somewhat from their 2015 and 2016 record peaks. A promising recovery is underway in the massive energy sector, which was buffeted by the collapse in oil and gas prices, and the world-leading U.S. technology sector continues its ascent. Despite a degree of political uncertainty, consumer and business confidence remains robust.
Other indicators, however, provide a more cautionary note. GDP growth of 2% on an annualised basis remains sluggish and even years into the economic recovery from the Global Financial Crisis of 2008, wage growth remains stagnant. The International Monetary Fund (IMF) has downgraded its growth forecasts for the U.S. economy, reducing from 2.3% to 2.1% for 2017 and from 2.5% to 2.1% for 2018. In 2017, unemployment rates reached a 16 year low of 4.3%, however, the nation’s labour force participation remains well below pre-recession levels. Household debt is rising, having now surpassed its pre-recession peak at the height of the credit bubble in 2008. Citing “significant policy uncertainties,” the IMF recently cautioned that the U.S. economy faces “larger than usual risks.”
For small businesses, the current economic climate has helped to continue their reversal following the last financial crisis. According to the Small Business Administration, small businesses account for 54% of all domestic sales, 55% of all jobs and 66% of new jobs over the past four decades. The formation of new businesses has rebounded to nearly 700,000 per year following the financial crisis, according to the Bureau of Labor Statistics.
Confidence amongst small and medium sized businesses (SMEs) surged off the back of the 2016 U.S. Presidential election and has maintained its momentum through the first half of 2017. However, there are signs that this increased confidence may be wavering as progress on the new Administration’s pro-business reforms slows. Delays in tax reform, healthcare reform and the future of key trade deals such as the North American Free Trade Agreement (NAFTA) are all causing SMEs to remain in a wait-and-see mode.