NFIB Weekly NewsLeading the News Rate Hike Shows Fed Sees Stronger Economy. (06/20/2017)
Media reports cast the Federal Reserve’s decision to raise interest rates as a good sign for the economy. The Los Angeles Times (6/14, Puzzanghera, Lee) reported that “Federal Reserve policymakers” implemented “their third small hike in a key interest rate in six months, a move that will push it above 1% for the first time since the 2008 financial crisis.” It was “another validation of the recovery from the Great Recession.” The Wall Street Journal (6/14, Timiraos, Subscription Publication) ran a similar analysis of the Fed’s motives, and the New York Post (6/14, Dugan) reported the Fed made its decision “as unemployment in the US has continued to fall and consumer confidence has risen.” Likewise, Business Insider (6/14, Oyedele) said the Fed was “signaling that it believes the economy is healthy enough to withstand tighter financial conditions,” Reuters (6/14, Dunsmuir, Schneider) that it cited “continued US economic growth and job market strength,” the New York Times (6/14, A1, Appelbaum, Subscription Publication) that it demonstrated “confidence in the health of the American economy,” and the Washington Post (6/14, Swanson) that it sent “a message of confidence in the strengthening of the US economy.” The Post adds that the Fed also “laid out plans to begin rolling back the more than $4 trillion balance sheet it accumulated in an effort to prop up the economy after the financial crisis.”
Small Business Optimism Remains Strong, But Hiring Qualified Workers Still A Challenge. (06/13/2017)
The NFIB reported that its May 2017 Index of Small Business Optimism remained at its April level of 104.5, meaning the index has now seen six months of historically-high optimism readings from US small business owners. NFIB President and CEO Juanita Duggan said, “The remarkable surge in optimism that began last year right after the election shows no signs of slowing down. Small business owners are highly encouraged by the President’s regulatory reform agenda, and they remain optimistic there will be tax reform and health-care reform. This is a policy-driven phenomenon.” For the May report, a majority of small business owners, 59%, reported hiring or attempting to hire workers. However, 51% indicated they had difficulty finding qualified workers. NFIB Chief Economist Bill Dunkelberg noted, “The tight labor market has been a persistent problem for small business owners for the past several months, and the problem appears to be getting worse.” He added, “It’s forcing small business owners to increase compensation, which we’re seeing in this data, to attract new workers and keep the ones they have.”
Data Show Small Businesses Added More Jobs In May; Finding Qualified Workers A Challenge. (06/06/2017)
The National Federation of Independent Business (6/2) reported that its latest jobs data indicates that in May, US small businesses continued to add jobs at an average rate of an additional 0.34 workers per company. Job growth was “powered mainly by stronger hiring plans and job openings.” NFIB Chief Economist Bill Dunkelberg said, “Small business owners are starting to convert their optimism into action. It’s a sign of a healthier economy.” At the same time, the data indicated that “when it came to finding qualified workers, 51 percent of small firms said they came across ‘few’ or ‘none.’” Dunkelberg said the lack of qualified workers is forcing small businesses “to increase compensation to stay competitive and hire temporary workers, but they are still having a difficult time increasing prices to absorb the additional costs.”
US Economy Grew More Than Initially Reported In First Quarter. (05/30/2017)
Bloomberg News (5/26, Jamrisko) reported the Commerce Department announced the US economy grew in the first quarter at an annualized rate of 1.2 percent, revised upward from 0.7 percent. Bloomberg said the quarter’s growth “wasn’t so miserable after all,” though it was “a relatively weak start.” The Wall Street Journal (5/26, Leubsdorf, Subscription Publication) said the report shows growth was stronger that initially reported but still modest. Barclays economist Michael Gapen commented, “The recovery continues to be perhaps uninspiring, but it’s awfully durable.”
Consumer Sentiment Remains High. (05/30/2017)
The Wall Street Journal (5/26, Hufford, Subscription Publication) reported the University of Michigan’s consumer sentiment survey found it at 97.1 for the last full week of May, up from 97 in April, but down from 97.7 at the beginning of May. The Journal said the rating has continued to be high since President Trump’s election, compared to last October when it was at a two-year low.
House To Focus On Proposed Tax Code Overhaul, Budget Proposal This Week. (05/23/2017)
The Wall Street Journal (5/21, Nicholas, Tau, Subscription Publication) reported that this week, the House Ways and Means Committee will hear testimony from Treasury Secretary Steven Mnuchin about President Trump’s 2018 budget proposal, and then hold a separate hearing on a tax code overhaul.
The Hill (5/19, Jagoda) similarly reported Republicans are “trying to stay focused on tax reform” this week, after the House Ways and Means Committee held its “first tax-reform hearing of the year” last week. The Hill added that Mnuchin and National Economic Council Director Gary Cohn “held a series of meetings with lawmakers on tax reform” last week “as part of the outreach efforts they’ve been undertaking since the roll out of Trump’s tax plan late last month.” Mnuchin also testified before the Senate Banking Committee, “and he and Vice President Pence spoke at the U.S. Chamber of Commerce, where their comments touched on taxes.”
The Hill (5/19, Jagoda) reported separately the hearing by the House Ways and Means Committee on the border adjustment tax scheduled for this week “will include witnesses who both support and oppose the proposal.” The piece explained that the witness list “reflects the fact that businesses, economists and lawmakers are divided over the import tax proposal that was in the tax-reform blueprint House Republicans released last year.”
Business Climate Trump’s Approach To Regulation Seen Boosting Several Industries. (06/20/2017)
The Washington Times (6/15, Miller) reported in an analysis that rolling back what President Trump calls “job-killing regulations” has been “the only area” where he “has chalked up big wins on his economic agenda so far,” but “that has been enough to quickly bolster confidence across the manufacturing sector and help revive the coal industry.” This approach to regulations “has had the most immediate impact on the coal industry after Mr. Trump revoked Obama-era rules to combat climate change” as “Corsa Coal Corp. opened its first new deep mine in Pennsylvania in six years” last week and Alpha Natural Resources “announced the opening of a new mine in West Virginia.”
Cohn To Lead Search For Next Fed Chair. (06/20/2017)
The Wall Street Journal (6/13, A1, Timiraos, Davidson, Subscription Publication) reported in a front-page story that as the White House begins its search for the next Fed chair, President Trump’s economic adviser Gary Cohn, who some believe could be a candidate for the job, will lead the effort. The Journal pointed out that in an April interview, Trump would not rule out reappointing current Chairwoman Yellen, but adds that many observers say that is unlikely.
A New York Times (6/13, Granville, Subscription Publication) analysis compared the Trump-Yellen relationship to President Lyndon B. Johnson’s clashes with Fed Chairman William McChesney Martin, calling it “a conflict from the 1960s with echoes in the present day, as President Trump’s campaign talk of robust tax cuts, job growth and economic expansion is bumping up against calls by” Yellen “for a cautious rise in interest rates, lest inflation get out of control.”
Economic Growth A “Bright Spot” For Trump Administration. (06/13/2017)
The Hill (6/11, Elis) reported, “The economy is emerging as a bright spot for” the Trump Administration, as “the S&P 500 is up more than 12 percent since Election Day, unemployment has reached a 16-year low and economic growth in the coming year is expected to reach 2.3 percent, more robust growth than the 1.6 percent it grew in 2016.”
Mnuchin Proposes “Sweeping Changes” To Dodd-Frank. (06/13/2017)
The Los Angeles Times (6/12, Puzzanghera, Koren) reports that Treasury Secretary Mnuchin has “proposed sweeping changes” to the Dodd-Frank law, “including a major reduction in the power of the Consumer Financial Protection Bureau and other rollbacks long desired by Wall Street.” In a report requested by the President, Mnuchin “recommended reducing oversight of large financial institutions, providing even more regulatory relief for smaller banks and loosening new mortgage restrictions designed to prevent a repeat of the subprime meltdown.” It was, the Times says, the Administration’s “first formal salvo in what’s expected to be a long and complex process involving Congress and federal agencies to try to scale back regulations that Republicans have complained are harming banks and stifling economic growth.” The Wall Street Journal (6/12, A1, Tracy, Davidson, Subscription Publication) reports in a front-page story that the banking industry has sought many of the changes in the proposal for years.
US Budget Deficit Widened Through First 8 Months Of Fiscal Year. (06/13/2017)
Fox Business (6/12, Sparshott, Davidson) reports that “the U.S. budget deficit widened through the first eight months of the fiscal year, highlighting challenges for the Trump administration as it looks to cut taxes and rebalance spending priorities.” Fox Business adds, “Government spending outpaced revenues by $433 billion from October through May, the Treasury Department said Monday, up from $405 billion during the same period a year earlier.” The article also states that “earlier this year, the Congressional Budget Office forecast a 3% rise in receipts this year,” and, “most of that revenue shortfall reflects smaller-than-anticipated tax payments from individuals and corporations, though the cause remains unclear.”
Congress Hopes For “Critical Mass” Of Support For Tax Reform By August. (06/13/2017)
The Washington Times (6/6, Sherfinski) reported that “lawmakers hope to reach ‘critical mass’ in support for a tax overhaul by August, but still have a number of political and procedural hurdles to overcome before then, a top Senate Finance Committee staffer said.” The Times added, “As Congress plots its agenda for the rest of this year, the chief tax counsel for Republicans on the Senate Finance Committee said they are still aiming for quick action, but even if the timetable slips, he still thinks it could get done by 2018 – ahead of congressional elections.” The article also stated that “a major tax overhaul is a unifying goal for both the White House and congressional Republicans, who are looking for accomplishments they can take to voters next year.” The Times wrote, “Mr. Trump’s blueprint generally tracks a House GOP plan in cutting personal income tax rates, though the president wants a deeper cut in the corporate tax.”
Small Business Marketing Facebook Increasing Transparency Of Marketers’ Ad Placement. (06/20/2017)
MediaPost’s Digital News Daily (6/14, O'Malley) reported Facebook is “allowing a select group of advertisers to see a list of potential publisher destinations” as part of the social media giant’s effort to be more transparent. Facebook plans to later expand that feature to all of its Audience Network partners by the end of the year. The company “plans to let advertisers apply their block lists at the account level.” Facebook will soon allow “Audience Network partners to specify what types of placements – whether in-stream or native – they want their video campaigns to run in through an opt-out format.”
Small Business Survey Shows 45% Of Small Businesses Lack A Website. (06/20/2017)
CNBC (6/14, Rosenbaum) reported the latest CNBC/SurveyMonkey Small Business Survey found that most small businesses still rely on word-of-mouth advertising, and 45 percent said they do not have a website. Only 36 percent of the small businesses in the survey use a business website to communicate news to customers and potential customers. Antara Dutta, a digital marketing exporting and a mentor with Delaware SCORE, said, “People are just afraid of technology and don’t realize how simple or easy it cold be.” Dutta said that the advantages of having a business website and optimizing it for search engine results far outweigh the learning curve and the marginal costs of purchasing a domain.
Twitter Rolls Out Changes To Flagship App. (06/20/2017)
MediaPost’s Digital News Daily (6/15, O'Malley) reported Twitter “unveiled some changes to its flagship app.” It now includes a “new side navigation menu, and fewer tabs at the bottom of the app.” Grace Kim, vice president of user research and design at the company, said Twitter has “refined” and standardized its typography and added bolder headliners. The reason behind the change was to “make it easier to focus on what’s happening,” Kim said in a new blog post. “Rounded profile photos make it clearer to see what’s being said and who’s saying it,” she added.
M-Commerce Via Smartphones, Tablets Set To Drive Retail, E-Commerce Growth. (06/13/2017)
Forbes (6/9, Weinswig) Fung Global Retail & Technology managing director Deborah Weinswig discussed the “shift to browsing and buying via smartphones” – dubbed “m-commerce.” Weinsig said m-commerce “will sustain e-commerce growth, as the convenience of mobile encourages more frequent online shopping.” Specifically, Weinswig cited a report from Euromonitor International, which indicates that “just over one-third of all US online retail sales will be made via mobile devices (including tablets) this year.” Euromonitor also “projects that that share will reach 43% by 2020.”
Google Confirms It Will Install Ad-Blocking “Filters” In Chrome Browser. (06/06/2017)
Advertising Age (6/1, Slefo) reported Google confirmed it will “soon” install ad-blocking technology in its Chrome browser in order to “block the most annoying ads currently marring the web experience.” The company called the technology a “filter” and is expected to target “popups, ads that flash quickly, change colors or force people to wait 10 seconds before accessing content on a publisher’s page.” The report said Google will offer publishers insight into “how they will be affected through a tool Google is dubbing ‘The Ad Experience Report.’” Chrome also “will give publishers the option to force a choice on people running their own ad blocking software: whitelist the site so its non-annoying ads can display or pay a small fee to access the content ad-free,” Ad Age said, adding that the impact is expected to large, “because Chrome is the most popular web browser for both desktop and mobile.”
Twitter Launches Customizable Direct Message Cards For Brands. (05/30/2017)
Campaign US (5/24, Tan) reported Twitter launched a customizable Direct Message Card this week that brands can customize to “promote and share the bots or other customer experiences they’ve created.” The launch of the feature “aims to help drive discovery of these experiences.” Brands can “disseminate the cards via Promoted Tweets or organic sharing,” and the card “can be embedded with image or video creatives and include up to four call-to-action buttons.”
Wages and Benefits Trump Signs Executive Order On Apprenticeships. (06/20/2017)
The Hill (6/15, Fabian) reported that President Trump signed an executive order “designed to expand apprenticeships to train people for millions of unfilled jobs,” and added that the order “directs the Labor Department to draft new rules allowing companies, industry groups and unions to create and certify their own programs, which would then be approved by the department.” MarketWatch (6/15, Schroeder) reported that the order “will double federal spending on apprenticeships to about $200 million annually.” The AP (6/15, Kellman) reported that “the money would come from existing job training programs.” The AP added, “Trump is directing the government to review and streamline some 43 workforce programs across 13 agencies.” USA Today (6/15, Swartz) reported that “a lack of skilled workers has created a hiring gap across several industries.”
Columns Tout Trump Apprenticeship Plan. In a column for The Hill (6/18), Urban Institute Fellow Robert Lerman wrote that “President Trump’s ringing call for expanding apprenticeship...should be welcome to all who favor a cost-effective approach to upgrading skills, raising job quality and widening routes to rewarding careers.” In a column for Fortune (6/18) Institute for Workplace Skills and Innovation CEO Nicholas Wyman wrote that President Trump’s new apprenticeships initiative “is cause for optimism that he will significantly improve the number and quality of apprenticeships in the economy.”
Labor Department Moves To Reverse Obama-Era “Persuader Rule.” (06/13/2017)
The Washington Post (6/9, Eilperin) reported the Labor Department announced that it would reverse the “persuader rule,” which would have required companies to “disclose their initial contacts with outside consultants on how to respond to unionizing efforts.” The Post said the reversal “marks a victory for business groups and a setback for organized labor and underscores the extent to which the department is starting to shift course under its new secretary, Alexander Acosta.” The Post added, “The regulation, which was finalized in March 2016, would require companies to report any ‘actions, conduct or communications’ they’ve pursued to ‘affect an employee’s decisions regarding his or her representation or collective bargaining rights.’”
Labor Department Rescinds Obama-Era Rule On “Joint Employment.” (06/13/2017)
Reuters (6/7, Wiessner) reported that the Labor Department announced it was “rescinding the Obama administration’s standard for determining when companies are ‘joint employers’ of contract and franchise workers.” In a statement, the department “said it had withdrawn a 2016 interpretation of the federal Fair Labor Standards Act (FLSA) that expanded the circumstances under which a business could be held liable for wage-law violations by staffing agencies, contractors, and franchisees.” Business groups “praised” the decision.
The Los Angeles Times (6/7, Kitroeff) reported that the Labor Department “also rescinded guidance stating that companies often deprive workers of protections by classifying them as independent contractors when they are actually employees.”
Fed’s Beige Book: Economy Grew At “Modest To Moderate Pace” Through May. (06/06/2017)
Reuters (5/31) reported that “the U.S. economy expanded at a modest to moderate pace from early April through late May but showed little sign of breaking out of a recent trend of sluggish inflation, a survey conducted by the Federal Reserve showed.” Reuters quoted the Federal Reserve’s “Beige Book report of the economy” as saying, “on balance, pricing pressures were little changed from the prior report.”
Fox Business (5/31, Leubsdorf, Chaney) quoted the report saying, “a majority of districts reported that firms expressed positive near-term outlooks; however, optimism waned somewhat in a few districts.” Fox Business added that “looking forward, businesses remained upbeat.”
The AP (5/31, Crutsinger) reported that “even with the tightening labor markets and more companies offering higher wages, the Fed said that business contacts noted little change to the broader recent trend of modest to moderate wage growth.”
Study: Jobs Without Steady Pay Spark Middle-Class Anxiety. (06/06/2017)
The New York Times (5/31, Cohen, Subscription Publication) reports the recently released US Financial Diaries Project – “an in-depth study of 235 low- and moderate-income households” – found that shifting pay within the same job has caused the persistence of an above-average level of economic anxiety, even as the unemployment rate dips below average. Oscillating hour tallies and unpredictable schedules make income difficult to rely on and can complicate aspects of family life such as childcare. The Times says that since monthly expenses and income both “pendulum,” but “do not necessarily move in tandem,” even the middle class increasingly is unable to “comfortably ride out the inevitable financial bronco ride.” Despite claims to the contrary, the gig economy doesn’t cause “jolts in income,” but rather “smooths them out.”
Number Of Workers In Gig Economy Expected To Double By 2021. The New York Post (5/31) reported the number of workers in the gig economy is expected to double to 9.2 million by 2021. Intuit and Emergent Research reported that these on-demand jobs will make up 43 percent of the workforce by 2021, more than the current number of professionals in finance or construction. The gig economy includes those workers who drive for Uber or use their home to hosts guests through Airbnb.
Philadelphia Fed President: Skilled Workers Boost Growth. (05/30/2017)
Fox Business (5/24, Wisner) quoted Philadelphia Federal Reserve President Patrick Harker saying, “If we want growth to be higher than what we have today, we either need productivity and/or growth of the labor force.” Fox Business added, “Harker says workforce development and other programs can bring some people ‘off the sidelines’ and into the work force, but another key factor is improving America’s infrastructure.” Fox Business wrote, “A ‘skills gap’ has left some companies struggling to find workers with specialized training,” and quoted Harker as saying, “If you look at the hires versus the openings, that gap has been pretty persistent over the course of the last several months, really several years.”