News Analysis: U.S. business optimism over economy slipping, but still positive

U.S. business optimism over the economy has dropped somewhat recently but it remains positive three months into the presidency of Donald Trump. Still, experts said Trump needs to put the pedal to the metal when it comes to tax reform - the no. 1 issue for U.S. businesses.

A Gallup poll released Tuesday found that Americans' views of the economy remain positive overall - but just barely. Gallup's U.S. Economic Confidence Index averaged +3 for the week ending May 7. The index is down four points from two weeks ago and now sits at a low for the year.

At the same time, the major bank Wells Fargo reported that small businesses - which employ more than 50 percent of the U.S. workforce - saw their optimism fall a slight 0.2 point to 104.5 in April. The decline was led by a sizable 8-point plunge in owners' expectations for future business conditions.

But despite the dip, confidence remains high, Wells Fargo said.

Trump, a billionaire-turned politician, has ushered in a new, pro-business White House after eight years of the Obama administration that implemented an avalanche of regulations that critics said had harmed the economy.

But at the same time, experts said Trump is lagging in key reforms that need to be made to really jumpstart the U.S. economy.

While Trump has tackled healthcare reform, businesses would have rather seen him focus on tax reform and infrastructure building.

"I think the business euphoria after the election is waning, slightly. There's a realization that while regulatory reform will have a positive impact, the big legislative priorities will take a long time," Gregory R. Valliere, chief strategist at Horizon Investments, told Xinhua.

"Yes, the decision to fight for health reform is somewhat similar to Barack Obama's ill-fated decision to go for health instead of jobs. Health reform is incredibly difficult. Trump would have had a much easier time with infrastructure," Valliere said.

He said Trump needs to keep the pressure on Congress to get moving on tax reform and cuts -- the biggest issue, by far for business. "He needs to emphasize that this process is on track," he said.

Trump also needs to cool it on trade protectionism -- this is an issue that worries business because of the threat that U.S. targets will retaliate, Valliere added.

Aparna Mathur, resident scholar at the American Enterprise Institute, told Xinhua that for U.S. businesses, particularly small business, optimism soared after Trump won the election last November.

Trump had campaigned on a platform of cutting taxes and deregulation, which would have been beneficial for businesses.

"The fact that optimism is marginally down today simply suggests that businesses are now realizing that it isn't going to be easy pushing through tax and business reform in this Congress," Mathur said.

She said the problem was not that Trump went after healthcare reform first. A lot of small businesses are struggling with the high costs of healthcare and part of that is linked to the Affordable Care Act, known as Obamacare.

"So had that reform package gone through, it still might have helped small and large businesses. I think the problem right now is the uncertainty about what this administration can actually push through," she said.

But, as long as the trend is still towards cutting taxes and deregulation, business confidence will remain high, she added. Enditem