It’s no secret that Wall Street is doing very well, and a lot of the success is coming from a surge in confidence in the market itself.
Just last Friday, the Dow, S&P 500, and NASDAQ all closed at a record high-the same week Trump announced his “phenomenal” tax plan. The Dow stocks alone have surged almost 12% since Election day (no coincidence).
The big banks are sharing the love, on Tuesday, the shares of J.P Morgan and Goldman Sachs closed at a record high, surpassing their original record set in 2007 before the great recession. Bank of America shares are the highest since the economic meltdown, but they haven’t been unable to beat their record.
One of the reasons this is occurring, is because of speculation; the prospects of lower taxes and fewer regulations give investors optimism and to make bets they wouldn’t typically make. This leads to a wealthy economy, but over speculation can lead to economic ruin (for this article however we’ll keep it positive).
For now it looks like Wall Street, the big banks, and large corporations are all thriving. But wait what about the little guy? How are small businesses doing? Well as it turns out small business confidence is at its highest point since December of 2004, and it’s for the same reason that Wall Street is so confident. The Trump administration is promising fewer regulations and lower taxes. Which make it easier for small businesses to grow and it’s something to get excited about.
According to the Small Business Administration (SBA), small businesses employ more than 64 percent of the U.S population. Therefore their success alone is tied closely to the economy’s success and growth.
The National Federation of Independent Businesses (NFIB) index for small-business optimism is a monthly survey that tracks small business confidence or lack thereof in the marketplace. That index made its way up to 105.9 in January; to give some perspective the index was at 93.9 just last year – the lowest the index has gone was in March 2009, where it was dropped to 81.6.
There were 1,874 recipients involved in measuring January’s NFIB index report. Of the 1,874 surveyed:
- 48% expect the economy to improve which is slightly down from December.
- 25% believed it’s a good time to expand their businesses.
When there’s increased confidence there’s more risk taking, and with more risk taking means more success, and sadly some failure. If this confidence continues, we might be at the start of possibly one of the most prolific economic booms in history.