• Small-business optimism may rise after Trump's election win, potentially boosting hiring intentions.
• Optimism surged post-2016 election, with small businesses planning to hire more employees.
• Improved labor market conditions could enhance consumer sentiment and boost wages.

Welcome to the vibe-spansion.

Yes, that's a portmanteau of vibes and expansion, and it's the upbeat version of its better-known cousin, the vibecession.

The term vibecession, a play on the word recession coined by content creator Kyla Scanlon, has been used to describe how people have felt about the economy for the last few years. While the National Bureau of Economic Research hasn't declared an official recession during that time, as there's been no significant decline in employment and consumer spending, inflation and a floundering job market have left consumers feeling downcast about the economy.

That could be about to shift.

That's because the optimism of small-business owners, and their intentions to hire more employees, are probably set to rise after Donald Trump's win in the presidential election earlier this month, with the president-elect promising to cut taxes and regulations.

"Small business owners lean Republican," said Oliver Allen, a senior US economist at Pantheon Macroeconomics, in a November 12 note.

Numbers from the National Federation of Independent Businesses' November survey aren't in yet, but the 2016 election period saw a substantial shift in small-business optimism. Even with higher interest rates and a slightly slowing economy, one would expect some sort of positive jolt to outlooks, experts say.

"After Donald Trump was elected the 45th President in November 2016, the National Federation of Independent Businesses (NFIB) small business optimism index skyrocketed. It was truly a reflection of 'animal spirits' coming to life and this behavior is likely to be repeated," Goldman Sachs' Chief US Equity Strategist David Kostin wrote in a November 18 client note. "We expect an improving small business operating environment will boost the sentiment and spending of SMBs in 2025 and lift the earnings and valuation of stocks with revenues tied to that spending."

Admir Kolaj, an economist at TD Economics, agrees.

"Although the economy is on different footing now and facing a different set of challenges, we anticipate we're likely to see an improved mood among small business owners to cap off the year," he said in a November 12 note.

NFIB data shows that optimism bleeds through to concrete actions. Hiring intentions also jumped after the 2016 election, and they have tracked closely with actual job openings.

Of course, job openings had already been on the rise in the years leading up to 2016, while they are falling today. But the expected jump in optimism, and the presumptive knock-on effect in hiring intentions, could turn that around.

With inflation having cooled off and interest rates starting to fall, more job opportunities flooding the market could be what consumers need to feel better about the economy.

When there are more jobs available, the labor market becomes more employee-friendly, and workers are able to command higher wages. Higher pay could help consumers feel like they're finally able to get ahead, assuming it doesn't fuel higher inflation again with many of the pandemic supply chain hurdles now out of the way.

Workers will also feel less trapped in their current jobs when openings are more abundant, according to Daniel Zhao, lead economist at Glassdoor. About two-thirds of workers feel "stuck," he said. With openings falling since 2022, the number of quits has dropped dramatically.

"Once the job market heats up again, that will open a relief valve to release the bottled up pressure, by giving workers the option to quit in favor of better options on the market," Zhao wrote in a November 19 report. "For the time being, employers may be benefiting from unusually low turnover rates, but they shouldn't be complacent—a wave of revenge quitting is on the horizon."

The turnaround may not be easy. Unemployment has been trending upward, and the tough credit environment for small businesses may mean that continues. Uncertainty stemming from Trump's tariff proposals could also hamper hiring and business investment.

But the idea that a rosier outlook from small-business owners could boost labor conditions is plausible. The past data is there to support it. Whether the post-election bump in optimism will be enough to spark a hiring spree and improve consumers' attitudes this time around will become evident in the months ahead.

The vibe-spansion could be upon us.

• Nouriel Roubini thinks higher inflation and slower growth are coming on the back of Trump's policies.
• He pointed to Trump's plans to levy steep tariffs and deport millions, which could stoke price growth.
• The pace of inflation could nearly double to 5% in the coming years, Roubini speculated.

Trump's policies are raising the risk for a handful of troubling economic consequences, according to one of Wall Street's most pessimistic forecasters.

Nouriel Roubini — also known as "Dr. Doom" for his bombastic and frequently bearish takes on the economy — said he believes some of Trump's policies could raise prices and slow growth in the US. That could involve inflation rising as high as 5% in the coming years,

he said speaking to Bloomberg on Wednesday, about double the current pace of price growth in the US.

Roubini said interest rates could also rise due to Trump's economic agenda. He predicted that long-end bond yields, which partly reflect interest rate expectations in the economy, could reach as high as 8%.

"Some of the economic policies may lead to higher economic growth," Roubini said, pointing to Trump's push to loosen regulation and slash the corporate tax rate. "But unfortunately, many of the other policies have the implication of higher inflation and lower economic growth."

Roubini pointed in particular to Trump's tariff plan, with the president-elect vowing to levy steep tariffs on goods from Mexico, Canada, and China, and a 10%-20% blanket tariff on most US imports. Experts have said the cost of tariffs could be passed onto buyers, with some businesses already floating future price increases.

Trump has also promised to slash corporate taxes and eliminate taxes in other areas, such as income from tips, overtime, and Social Security benefits. Roubini suggested that could spell trouble given the overarching picture of the US debt, as debt is inherently inflationary.

Trump's agenda could raise the national debt by as much as $15.5 trillion from 2026 through 2035, according to an analysis from the Committee for Responsible Federal Budget.

Trump's plan to carry out mass deportations could also impact the outlook for inflation and growth, Roubini noted, given that immigration has bolstered the workforce and helped tame inflation.

"So definitely mass deportation is stagflationary," he added.

Roubini has repeatedly warned that Trump's second term in office could raise the risk of stagflation, a scenario involving stubborn prices, sluggish economic growth, and steep unemployment. Some analysts describe the situation as even worse than a recession due to the chaos that unfolded the last time the US was in the midst of a stagflationary crisis.

Other forecasters have also warned of the potential for higher inflation in Trump's second term. Deutsche Bank analysts floated a potential inflation increase in 2025, adding it was possible the Fed may not lower interest rates to keep high prices in check.

Trump, though, has repeatedly disputed the idea that his policies are inflationary and said he would lower prices for Americans. He enacted tariffs in his first term as president without a significant inflation increase, but experts say that his policies this time around are far more wide-reaching, explaining the difference in inflation forecasts.

"Trump will once again cut taxes and unleash American energy to lower prices on groceries and other goods when we send him back to the White House," Taylor Rogers, a spokesperson from the Republican National Committee, previously told BI.

• Trump's plans to deport millions of immigrants could exacerbate America's demographic challenges.
• The US birth rate has been falling, which economists say could hobble the labor market and economic growth.
• Trump's plan could result in an older population and fewer workers, economists told BI.

Donald Trump's plan for a sweeping immigration crackdown involving mass deportations has been described as potentially inflationary, but economists say it could exacerbate another problem America faces: an aging population.

Immigration was thought to be one solution to Americans having fewer kids, and reversing the trend could result in a larger population of older people and lead to a smaller workforce, economists have said.

Demographic shifts are likely to be greater if immigration is significantly curtailed, Alan Berube, a senior fellow at the Brookings Institution, said.

During his campaign, the President-elect promised to deport unauthorized migrants, of which there are around 11 million in the US, according to the Center for Migration Studies. Trump also promised to ban refugees from some countries and reinstate travel bans he implemented in his first term, which could restrict immigration flows.

If immigration were to fall to "low" levels—which the Brookings Institution defines as 350,000-600,000 net migrants per year—the US population could drop by 4% by the end of the century, Berube said, citing a 2023 Brookings projection. If the US were to completely close its borders, the population could drop 32% by 2100.

Berube told BI that the effects of the immigration policy Trump ultimately pursues in his term would likely fall between those two estimates. He added that this could create issues for the rest of the population, which will need to support a larger cohort of older people.

In the group's low immigration scenario, America's 65-and-older population would make up 57% of the working-age population by the end of the century, up from 28% in 2022.

"The US workforce right now is aging more rapidly than at any point in our country's history," Berube said. "Even as our population ages, if we cut off the supply of immigrant labor, the challenges that go along with an aging population and an aging workforce are going to get much more serious."

Trump and the Republican party have said that the goal of deportations would be, in part, to drive down the cost of healthcare, housing, and education for Americans.

"The American people re-elected President Trump by a resounding margin giving him a mandate to implement the promises he made on the campaign trail. He will deliver," Karoline Leavitt, a spokesperson for Trump's camp, told BI in an email when asked about the potential impacts of Trump's immigration policy.

Economic challenges

Fewer people coming into the US would likely be a headwind to growth, given that the birth rate has been trending down for decades. The general fertility rate hit a record low in 2023, with just under 55 births for every 1,000 women between the ages of 15 and 44, according to the Centers for Disease Control and Prevention.

Berube said immigration is thought of as a band-aid to demographic problems since immigrants tend to be younger, which offsets the aging population. Immigrants also tend to work at higher rates, supplementing the job market.

The US had around 8.3 million unauthorized immigrant workers in 2022, according to data from the Pew Research Center.

Certain sectors are particularly at risk of labor shortages in the event of fewer migrant workers, according to José Torres, a senior economist at Interactive Brokers.

Sectors with a high proportion of undocumented immigrant workers, like construction and agriculture, could see the number of workers fall. Those industries are already facing steep labor shortages, with construction in particular facing a shortage of 200,000-400,000 workers each year.

While Trump's pro-market policies will offset some of the economic impact, Torres thinks GDP could fall by half a percentage point once Trump implements his immigration crackdown.

"When you have immigrant flows, that's growth positive. That lifts your GDP in the short run because you have all these folks that are coming in. They're coming for economic opportunity, they're working really hard," Torres told BI. "So that's going to be a headwind to the labor market overall," he said of deportations.

Todd Buccholz, a former White House economist during the George H.W. Bush Administration, thinks Trump's immigration policies will have a mild economic impact, partly because he doubts immigration will fall over the long term.

"I think it's important that the country recognize the aging of the population, the lower fertility rate," Buccholz said. "If you say, no one else is coming in, the gate is locked and no one else can play … we're going to be shrinking and have more senior citizens and fewer people to support them. I think that raises real issues," he added.