Small businesses create the majority of new jobs in our Nation and account for more than half of the output of our economy. Nearly half
of all privately-held small businesses are majority- or equally-owned
by women, and they continue to grow at twice the rate of all small U.S.
firms. Because small businesses are vital to our Nation's prosperity
and reflect the hard work of the American people, the President has
taken important steps to assist small businesses and the people they
employ by reducing taxes, encouraging investment, and removing
obstacles to growth.
Taken together, the tax relief bills that President Bush signed in
2001 and 2003 will provide 25 million small business owners with
savings averaging more than $2,800 each. The 2003 bill also quadrupled the amount that small businesses can expense for new capital
investments, encouraging new investment in technology, machinery, and
other equipment. This new technology and equipment will increase
productivity and create new jobs, thereby contributing to the overall
strength of our economy.
Background on Recent Economic Indicators
The Economy is Gaining Strength
Real GDP growth in the third quarter of 2003 was 8.2 percent at an annual rate, the best in nearly 20
years. The consensus of private forecasters is that growth will
continue above the historical average (since 1960) of 3.3 percent for
the next several quarters.
Financial markets reflect this optimism. The value of U.S. stock markets has increased by more than $3 trillion since the beginning of
the year--increasing the value of many workers' 401K plans and other
Household Spending--A Source of Strength in Recent Years--Has Increased Even Further Since Early Summer
Housing starts in November were at their highest levels in almost 20 years. Mortgage interest rates remain near historic lows.
Retail sales (excluding autos) grew at an average 9.1 percent annual rate over the last six months.
There Are Encouraging Signs for a Recovery in Business Spending
Surveys show that orders are increasing rapidly for manufacturers. The Institute for Supply Management (ISM) survey's index of new orders in manufacturing is at 77.6, its highest level since 1950.
Non-manufacturers also continue to report solid new orders well above
the level of 50 that indicates expansion.
Shipments of durable goods strengthened markedly through late 2003. Real business investment in equipment and software rose 17.6 percent at an annual rate in the third quarter, the fastest growth in five years.
Productivity growth over the past four quarters is estimated to have been about 5.0 percent, about double the average rate from 1995-2000. Productivity growth since the fourth quarter of 2000 has been at the highest rate for a comparable period in 40 years. This has bolstered corporate profits and helped to keep inflation low.
Consumer Confidence and Business Confidence Surveys Show Increases
Consumer confidence has increased substantially since early 2003 and is now well above its levels one year ago.
Business executive confidence also rose in the third quarter to the highest level since 1992.
Investor confidence is also surging. The UBS Index of Investor Optimism rose 11 points to a 21-month high in November.