2016 was a strong year for the US economy. However, President Trump’s election has not only given small businesses reassurance for brighter days ahead but has also seen large corporations express their fair share of positivity for their businesses under Trump’s administration.
A report from the Kauffman Foundation earlier in 2016 showed that start-up activity for the year had risen significantly from 2015, an increase for the second consecutive year since the recession hit the United States economy. After President Trump’s election, the National Federation of Independent Business (NFIB) released a report showing optimism levels had greatly improved after Trump’s election. NFIB’s optimism index is out of a possible 110. Before the election, optimism levels had increased by 0.5 to 95.4. However, after President Trump’s election, the optimism index jumped to 102.4, a whopping increase. This increase was the second highest since 2011. Clearly, business owners are quite hopeful of Trump’s administration.
So, why are businesses so optimistic?
- 1. Deregulation and Tax Reforms
Part of President Trump’s campaign primarily relied on the policy of revising existing tax rules and regulations. Some business owners hope that this year will see continued revision of labor laws such as the halting of the Department of Labor Overtime Rule. Stopping this rule from being implemented saved business owners money they would have imminently spent on employees’ wages. Had the law been applied, the salary threshold for workers eligible to receive overtime would have increased by 100 percent to $47,000.
Further, President Trump has made a tax proposal that will lower corporate taxes to 15 percent. Further, S Corporations and special entities would pay a tax rate of 15 percent under Trump’s plan. Decreased taxes would mean that business owners could expand their companies using the increase in revenue.
- The Stagnation of Minimum Wage
The federal minimum wage currently stands at $7.25 an hour. Despite campaigns from the Obama administration and Democrats, in general, to have this figure raised, it has not been changed since July 2009. Variations in the minimum wage is usually a source of worry to various business owners. This is because a higher minimum wage means it becomes harder for start-ups to begin their activities since they need more capital to employ the same number of people. Further, higher minimum wages pose a significant decrease in the returns that corporations have each fiscal year, making it harder for them to maintain or improve their businesses within the United States.
With the Trump administration, Congress is dominantly Republican. This means that there is a lesser likelihood that minimum wage will increase during Trump’s tenure as President, ensuring a secure environment for businesses.
- Reforms on the Healthcare Sector
Efforts by the Trump administration to repeal and replace Obamacare will have a positive impact on employers everywhere. The law requires each citizen to have health insurance. Small companies, with at least 50 employees are required by the law to offer workers health insurance. The fact that Obamacare was expensive means that it cost employers more to have abide by the law. The NFIB cites healthcare’s rising cost as the top issue for small businesses last year.
However, President Trump’s proposal for a cheaper alternative and Republicans working around the clock to produce a draft set to begin implementation by mid-April means businesses will now be able to provide employees with more affordable healthcare packages.
What President Trump Has Done So Far
- Improvement of the Media Business
Over the past years, media companies have been dwindling. Newspapers have been lowering their number of staff and subscriptions were significantly decreasing. The drop in this business has considerably been because of the rise of the internet and social media platforms. Further, prospects for news corporations involved in cable TV were declining by the day.
However, following President Trump’s election, the media has seen a surge in its business. People have become more interested in the news, and this has certainly been due to the President’s openness in expression. Trump’s attacks on most mainstream media outlets have brought over 80 journalism groups together to condemn his sentiments. Newspapers have seen a surge in subscriptions. The Times, for example, had 276,000 new digital subscribers in 2016’s fourth quarter, in line with President Trump’s election. Also, non-profit media organizations are receiving higher donations, and cable TV news corporations are receiving higher ratings which come along with a larger audience. These, ultimately lead to greater profit for the media.
- Lowering the Unemployment Rate
In December 2016, President Trump celebrated the creation of an estimated 8,000 new jobs for the American people. This was as a result of tech mogul Masayoshi Son pledging that companies controlled by SoftBank, his firm, would invest $50 billion in the United States and create the jobs. Sprint would create 5,000 of the jobs while 3,000 would be set up by OneWeb. SoftBank is a major shareholder of both of these companies.
Additionally, a report by ADP, a payroll processor, shows that 221,000 jobs were created in the month of February. This was the largest increase in private sector hiring that the United States has observed for the last three years. This lowers the unemployment rate from 4.8 percent to 4.7 percent under President Trump’s tenure.
- General Improvement in the Stock Market and Interest Rates
As of December 2016, traders in the market for interest-rate futures forecasted the US dollar deposit rise would increase to 1.6 percent by the end of this year. The forecast is a 0.5 percent increase from early November 2016. The major factor contributing to the increase is President Trump’s election. Expectations that the US economy will grow within the year will prompt the US Federal Reserve to raise the deposit rates. Stock markets, especially within the defense sector, have recorded steady rises with President Trump’s administration.
Further, President Trump has said he will ask Congress for the approval of a $1 trillion infrastructure bill. This investment on infrastructure had been estimated would contribute a 0.4 percent increase in US economic growth by the end of this year, and consequently a 0.8 percent increase by 2018.
Overall, things are looking good for business right now. Hopefully, Trump will continue to make good on his economic campaign policies.
