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Tuesday, April 1, 2025

Small business optimism index drops amid rising uncertainty

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David Addington Executive Vice President General Counsel | NFIB

David Addington Executive Vice President General Counsel | NFIB

The National Federation of Independent Business (NFIB) has released its latest Small Business Optimism Index, revealing a decline of 2.1 points in February to 100.7. Despite this being the fourth consecutive month above the Index's 51-year average of 98, it remains 4.4 points below its recent peak of 105.1 in December. The Uncertainty Index increased by four points to reach 104, marking the second-highest recorded reading.

Thor Stacey, Alaska State Director, emphasized the need for Congressional action: "Congress needs to act swiftly to prevent the 20% Small Business Deduction, which millions of small business owners use and rely on, from expiring at the end of the year," he stated. "Without the deduction, owners of Main Street enterprises are facing a huge tax increase."

The NFIB's monthly Small Business Optimism Index is widely recognized as a key indicator of America's small business economy and is utilized by various governmental bodies including the Federal Reserve and state legislatures. It provides a national overview without state-specific breakdowns and reflects data from NFIB-member small-business owners who typically employ between one and nine people with gross sales around $500,000 annually.

Bill Dunkelberg, NFIB Chief Economist, noted that "Uncertainty is high and rising on Main Street for many reasons." He pointed out that fewer small business owners expect better conditions in the next six months and there has been a decrease in those viewing it as a good time to expand their businesses.

Key findings from the latest Optimism Index include:

- A ten-point drop from January in net percent of owners expecting economic improvement.

- A five-point decrease in those considering it a good time for business expansion.

- Inflation was cited as the most significant problem by sixteen percent of owners.

- A net twenty-nine percent plan price hikes over the next three months.

For more than eight decades, NFIB has been advocating for small and independent businesses across America. More information can be found at nfib.com.

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