Is the five-year drought of good small business news finally over? Tuesday’s release of the latest Small Business Optimism Index from the National Federation of Independent Business (NFIB) would lead everyone to believe it is, with the net percent of owners expecting the economy to improve rising 16 points from November to a net 52% (seasonally adjusted), the highest since the fourth quarter of 1983.
Additionally, the percent of small business owners believing it is a good time to expand their business rose six points to 20%, seasonally adjusted. This is the highest reading since February 2020.
“Congratulations to those who took the oath of office on Monday,” said Anthony Smith, state director for NFIB in Oregon. “Today’s good national news will give legislators something to build on when they re-convene for regular business on January 21. Small businesses nationally are finally seeing some light at the end of the tunnel for the first time in five years. State policies can either build on this good news or minimize its full, beneficial impact. NFIB will work to point lawmakers in the right direction.”
NFIB’s monthly Small Business Optimism Index is the gold standard measurement of America’s small business economy. Used by the Federal Reserve, Congressional leaders, administration officials, and state legislatures across the nation, it’s regarded as the bellwether on the health and welfare of the Main Street enterprises that employ half of all workers, generate more net new jobs than large corporations, and gave most of us the first start in our working life. The Optimism Index (aka Small Business Economic Trends report) is a national snapshot of NFIB-member, small-business owners not broken down by state. The typical NFIB member employs between one and nine people and reports gross sales of about $500,000 a year.
From NFIB Chief Economist Bill Dunkelberg
“Optimism on Main Street continues to grow with the improved economic outlook following the election. Small business owners feel more certain and hopeful about the economic agenda of the new administration. Expectations for economic growth, lower inflation, and positive business conditions have increased in anticipation of pro-business policies and legislation in the new year.”
Highlights from Latest NFIB Small Business Optimism Index
- The net percent of owners expecting the economy to improve rose 16 points from November to a net 52% (seasonally adjusted), the highest since the fourth quarter of 1983.
- The percent of small business owners believing it is a good time to expand their business rose six points to 20%, seasonally adjusted. This is the highest reading since February 2020.
- The net percent of owners expecting higher real sales volumes rose eight points to a net 22% (seasonally adjusted), the highest reading since January 2020.
- A net 6% (seasonally adjusted) of owners plan inventory investment in the coming months, up five points from November and the highest reading since December 2021.
