The National Federation of Independent Businesses’ Uncertainty Index ended the year at record highs. Small businesses, which drive the U.S. economy and account for well over half the private sector jobs in the country, have held back hiring and capital expenditures as uncertainty increased over the past year to unprecedented levels.

NFIB US Small Business Uncertainty Index

These same small business owners cited high taxes and increased regulatory burdens as their greatest challenges leading up to the election. Challenges that seemed to be unanswered during the previous eight years may have played into the unlikely election outcome and the move seen in the markets since November 8.

% of US Small Business Single Most Important Problem

As the pendulum swings away from high taxes and regulatory overreach (as perceived by small business owners), we sense increased optimism at the business level running through to the consumer, where confidence is already the highest it’s been since 2001. We will be watching business confidence and uncertainty to see if they react to proposed changes to their perceived challenges over the next year. Increased confidence is the right prescription for an economy that has seen a decade of anemic growth.