After a dizzying boost following the 2024 US Presidential election, small businesses are feeling less confident about the economy and the conditions favorable for growth, according to the monthly report from the National Federation of Independent Business (NFIB). The monthly survey takes the temperature of small businesses across the country based on numerous key factors, including sales, employee compensation, inflation, expansion and capital outlays, and other economic touchpoints.
While the 50-year average is 98, the Optimism Index jumped eight points from October to November 2024 (93.7 to 101.7, respectively), and another three points in December 2024 (105.1). For reference, the index last breeched 98 in December 2021 and hovered in the low 90s and high 80s from January 2022 to October 2024, driven primarily by inflationary pressures, supply chain issues, and the lingering effects of the pandemic. In other words, small business owners saw a silver lining at the end of 2024 that has not panned out so far in 2025.
NFIB also measures uncertainty, which rose to its highest score ever (110) in October 2024. Although it dropped to 98 and 86 in November and December 2024, respectively, it again rose to 100 in January and now sits at 104 in what NFIB is calling “uncertainty whiplash.”
However, inflationary prices don’t tell the whole story. 19% of respondents cite “labor quality” as the top issue again this month, while “inflation” and “taxes” tied for second place at 16%. The top issues inverted in a year-over-year comparison with February 2024. Of note, which was not measured by the report, is the frenetic pace at which the Trump administration has been moving since January’s inauguration to slash federal spending as well as the threats and counterthreats of tariffs. These conditions have been reported elsewhere as contributing to the uncertainty felt by American businesses of all sizes.
These data points are in line with recent federal reports, including the February jobs report that was slightly below expectations at 151,000 and February retail sales, which were better (up 0.2%) than January’s disappointing numbers (-1.2%).
The full NFIB report can be found here.
Visit nfib.com for more information.
[03.18.25]