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The NFIB’s small business optimism index surged dramatically in November, riding the post-election euphoria over Donald Trump’s incoming presidency to post the biggest monthly gain since 1980.
This didn’t come as a surprise. The barometer is notoriously tied to politics, thanks to the strong link between Republican leadership, loose regulatory environments, and lower taxes, which drive small business morale.
Whether this is true is, of course, up for debate. The NFIB release says that small businesses expect a “repeat performance” of Trump’s sub-2% first-term inflation — while hardly any economists expect those numbers amid plans for tariffs, tax cuts, and other inflationary policies.
But warranted or not, a surge in optimism that big for this oft-ignored index deserves a second look this time — and our selection as Chart of the Week. Because sentiment can have real dollar effects in markets.
If the jump — which puts the index at June 2021 levels and above its 50-year average for the first time in a couple of years — is big enough to change how small businesses hire and spend, the knock-on effects will reverberate throughout markets.
In his 2025 equity outlook, Goldman Sachs’ chief US equity strategist David Kostin wrote that his team expects the improved small business outlook to “lift the earnings and valuation of stocks with revenues tied to that spending.”
He made a list of 60 stocks that derive most or even all of their income from small businesses. You can guess many of them. A sampler: United Rentals (URI), Groupon (GRPN), Intuit (INTU), Cintas (CTAS), Deere (DE), Waste Management (WM), and Shopify (SHOP).
Some of them are even the biggest of Big Tech: Just think of all the companies that market on Facebook and Instagram. Their parent company Meta (META) gets 75% of its revenue from small businesses. Though artificial intelligence has distorted the stock’s valuation, it’s the little guy who’s keeping Meta’s lights on. The money is real.
Kostin’s argument is bolstered by the latest sentiment reading — and by the gains and the broadening of the post-election stock market. However, the details of the NFIB’s small business optimism release show that it’s something to monitor through surveys for very small businesses and quarterly releases for small public companies.
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