For much of the past few years, the economic recovery has seemed relegated to good “big picture” news that most weren’t seeing in their everyday lives. But there’s growing evidence in recent months that Americans are starting to feel the economy improving more directly.
The latest evidence? Small business owners are more upbeat about the economy. The National Federation of Independent Business (NFIB) monthly index of small business optimism reached a 100.4 reading in December, well above what analysts expected and its highest level since October 2006. Small businesses were markedly upbeat about a wide range of things: The data showed an increase in plans to hire, plans to spend more, and feelings that now is a good time for businesses to expand. Expectations for higher sales surged, reaching their highest level since 2007.
The small business sector accounts for about half of gross domestic product, and firms are “clearly benefiting from increased consumer confidence, lower oil prices, stronger consumer spending, and well received employment reports,” IHS Global Insight economist Chris Christopher writes in an e-mailed analysis. “The jump in the percentage of firms that are expecting to expand and hire more people is a significant plus for the overall economy.”
There’s good news for workers, too. A quarter of the firms in the survey said they were increasing employee wages in December, and 17 percent said they planned to raise wages in the coming months. (Last week, however, the Labor Department’s monthly jobs report showed a surprise drop in hourly wages).
The NFIB report comes amid growing signs that Americans are finally feeling better about the economy overall. A Gallup index of economic confidence has had two weeks in a row of positive readings after a long string of negative ones. Last month, a majority of Americans in a CNN/ORC poll rated the economy as “somewhat good” or “very good,” for the first time in seven years, and indices that measure consumer confidence and sentiment continue to rise.
Obstacles, of course, remain. Overall, wages haven’t shown strong, sustained growth yet, and the percentage of workers who have opted out of the workforce altogether is the highest in nearly four decades. But another positive sign on the hiring front came Wednesday: the number of job openings in the US reached their highest level in 14 years in November, according to data from the Labor Department. Positions waiting to be filled rose by 142,000 to 4.97 million in November, the most since January 2001.