Small business owner optimism surged to its highest level since October 2018 in December, but the joy was not evenly spread geographically. With a caveat that the number of observations in each Federal Reserve district or U.S. Census region is sometimes relatively small, owners were most optimistic in the Richmond district (113.5) and least so in Kansas City (98.6) after the election. Small business owners in the Atlanta (110.0) and Dallas (110.3) districts came in second, followed by New York (108.5). Casual observation reveals some obvious correlations between results in the Federal Reserve districts and U.S. Census groupings.
There are many reasons for diversity in the responses to the news. Industrial concentrations and focus vary significantly with climate, transportation options, energy costs, and population migration. State governments pursue different policies which could produce different responses as well. “Red” state small business owners might respond differently from “blue” state small business owners depending on the issues.
Overall, regardless of their location geographically, small business owners are much more optimistic about the future than they were pre-elections. Optimistic owners are more likely to hire, make investments in their firms, and order more inventory to meet the demands of the customers they expect to show up. That will provide support for economic activity and reduce the risk that the economy might fall into a recession.
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