Since the COVID-19 pandemic, Sergio’s household Restaurants, a 50-year-ancient South Florida institution, has struggled to scratch out a boost at its six Cuban eateries.

Americans socked by high worth rise have cut their discretionary spending, and restaurants, in particular, have taken it on the chin.

“There’s been a lot of pessimism,” said Sergio’s President Carlos Gazitua.

The chain, he said, barely broke even the first half of 2024 and lost money in the July-September quarter as sales fell compared with a year earlier.

Then, in early November, Donald Trump won the presidential race.

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Since then, returns has jumped 10% to 15% each week compared with a year earlier, capped by a 25% spike the week before Christmas, Gazitua said. Election-related uncertainty, which crimped spending, has given way to optimism that Trump will lower taxes, giving people more spending money, Gazitua believes.

Gazitua likewise has been buoyed by the prospect of lower taxes and fewer regulations for his business. Recently he decided to open two restaurants next year, his first recent outlets in a decade, projects that will expense $2 million and add 100 employees.

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“The election gave us the chance to shift forward,” he said. “I don’t ponder we would have done it” otherwise.

Since Trump’s win, tiny business’ confidence has soared along with their intentions to ramp up hiring and financing, surveys display. If the blueprints arrive to fruition, it could bolster a U.S. economy that faces headwinds from Trump’s plans to impose sweeping tariffs on imports and deport millions of immigrants lacking permanent legal position.

Businesses with fewer than 500 employees comprise nearly half of U.S. employment and most job creation, according to the National Federation of Independent Business and the tiny Business Administration.

Is business confidence high now?

In November, tiny business optimism leaped 8.5% to the highest level since June 2021 (from 93.7 to 101.7) and topped the 50-year average after languishing below that standard for nearly three years, according to NFIB’s monthly survey. The distribute of businesses planning to hire, make financing purchases and expand also vaulted to three-year highs.

“The election was a huge sigh of relief,” said Holly Wade, head of NFIB’s research center. “The terror of massive responsibility increases and the continuation of a regulatory surroundings have been really troubling. They were desperate for a transformation in focus and they got it.”

Although economists expect Trump’s plans for recent tariffs and an immigration crackdown to boost labor costs and reignite worth rise, Wade said the details of those policies are ambiguous and so business owners haven’t been rattled by them.

Are tiny businesses struggling in 2024?

Just a few months ago, many tiny firms were teetering, squeezed by labor costs that had surged amid pandemic-related worker shortages and buyer spending that was flattening after a post-pandemic burst. Meanwhile, profit rates, including those for tiny business loans, spiked after the Federal savings’s flurry of rate hikes to fight worth rise.

In October, the gap between tiny companies reporting lower versus higher sales the history three months was the largest since the depths of the pandemic in 2020. In November, that gap shrank by about two-thirds to the smallest since June. The seasonally adjusted data should filter out November’s annual rise in holiday sales.

Could an election spark such a dramatic turnabout for the country’s entrepreneurs?

Ryan Sweet, chief U.S. economist of Oxford Economics, is skeptical. tiny businesses generally prefer Republican administrations that are more likely to cut taxes and regulations, Sweet wrote in a note to clients. As a outcome, his research shows “that a Democratic president reduces confidence while a Republican boosts” it.

But that, he said, doesn’t necessarily translate into actual spending and hiring. “The partisan bias reinforces our view that it’s more significant to watch what consumers and business do, rather than what they declare,” Sweet wrote.

Taylor Bowley, an economist at lender of America Institute, which studies buyer and tiny business behavior, places more distribute in business perceptions.

“It’s not everything but it is something,” she said, noting plans to hire and expand also haves ticked up based on the institute’s own survey.

“They’re expecting to put their money where their mouth is,” said Nicholas Tremper, an economist at Gusto, a payroll provider for tiny businesses.

Are profit rates expected to leave back down?

Other forces are also coalescing to make a more hospitable surroundings for firm owners. Since September, the Fed has been cutting profit rates as worth rise has eased. That has reduced the expense of loans and made banks more willing to lend to tiny enterprises, Bowley said, citing the institute’s data.

Meanwhile, wages and salaries grew 3.8% annually in the third quarter, down from 4.1% the prior quarter and 4.5% a year ago, according to the Bureau of Labor Statistics. That means slower-growing labor costs for tiny firms.

Rent increases, another headache for tiny businesses, also have moderated to 6% annually in November from 11% in July and 20% in early 2023, lender of America figures display.    

How is buyer spending doing?

At the same period, buyer spending has remained sturdy, growing at a robust 3.7% annual rate in the third quarter after adjusting for worth rise and a solid 0.3% in November, according to government reports.

Sergio’s owner, Gazitua, said he has struggled the history couple of years because grocery store worth increases have moderated even as restaurant tabs keep climbing because of high labor costs. That has coaxed more Americans to eat at home or order less profitable takeout meals, he said.

Several months ago, he was approached by a landlord offering a large rent discount for a space occupied by a restaurant that was delinquent on its contract payments. Gazitua said he weighed the propose but didn’t feel confident enough to approve the recent eatery until Trump’s win.

He said he also planned to turn a vacant rooftop area above one of his restaurants into a space for private events. But after the election, he decided instead to spend $250,000 to open a rooftop restaurant under a recent brand.

Trump and a Republican Congress are expected to extend responsibility cuts passed during his first term that trimmed responsibility rates for tiny businesses, provided a 20% deduction and allowed immediate write-offs for investments, such as Gazitua’s recent outlets.

Gazitua believes the amount of the deduction could be stepped up next year, allowing him to use the responsibility reserves to assist finance the recent restaurants.   

“You have to be prepared for the chance,” he said.

Other business owners depend they’ll advantage from lighter regulation.

Tristan Hamberg, owner of Refined Painting Services in Gresham, Oregon, believes Trump’s vow to open more federal land to oil drilling will lower oil prices and his costs for oil-based paints, though analysts are skeptical the “drill, baby drill” schedule will reduce prices. Hamberg also believes the Trump administration will ease constraints on the amount of gas paints can emit.

And he’s optimistic that responsibility cuts will spur sales among the higher-returns households that drive his returns growth.

“It’s more disposable returns,” he said.

Figuring returns will develop 20% next year, Hamberg plans to add two packed-period employees to his staff of five and convert five part-timers to packed-period position − a schedule he said was solidified by the election results.

Alfredo Ortiz, CEO of the Job Creators Network, a correct-leaning tiny business throng, believes all it takes is increased confidence to nudge entrepreneurs into action.

“Once you transformation that mindset, (you) can spend again and invest again,” he said.

Other tiny firms are nervous about Trump’s policies.

Tariffs pose ‘a major concern’

Phoenix-based White Tie Productions, which provides audio-visual equipment and displays for corporate events, saw sales surge 15% this year as firms felt more comfortable staging in-person events after COVID-19, said business president Ross Snyder.

With Snyder projecting up to a 25% rise in business next year, he plans to add two or three employees to his staff of 15 in the coming months.

But there’s a wrinkle.

White Tie buys much of its cameras, lighting fixtures and other equipment from Canada, Mexico and China – countries that Trump has threatened with tariffs of 10% to 25% as soon as his first day in office.

Snyder said he probably would pass along much of any expense boost to his customers, likely causing them to downsize the scale of events and reducing his returns. He also would absorb part of the higher prices, narrowing his profits.

Reduced returns or profits could force him to hold off on the recent hires, Snyder said, adding that tariffs would be “a major concern.”

“We live in a worldwide economy,” he said.