Perceived political risk has fallen significantly since the election of Donald Trump as the next president of the United States, at least among small businesses operating in the country.
As this chart from Bank of America-Merrill Lynch (BAML) reveals, it’s tumbled from the levels seen before the US election.
Using data from the December National Federation of Independent Business (NFIB) small business optimism survey, of those firms reporting that it’s “not a good time to expand” right now, only 10% have cited “political climate” as the reason not to do so.
Quite a turnaround from the view expressed in August when 39% of firms who suggested now was not a good time to expand saw the political climate as a reason not to do so.
According to BAML’s US economics team, “this change in business sentiment is notable and could translate into increased hiring or investment”.
No doubt those backing the Trump “reflation trade” — centred around higher US growth leading to higher inflation and interest rates — are hoping that outcome will play out.
Donald Trump will be sworn in as the 45th president of the United States on Friday, January 20.