The latest NFIB Small Business Optimism Index is out. Optimism is still above historic levels but uncertainty is at the second highest recording in the decades-long history of the index.
“Uncertainty is high and rising on Main Street and for many reasons,” said NFIB Chief Economist Bill Dunkelberg. “Those small business owners expecting better business conditions in the next six months dropped and the percent viewing the current period as a good time to expand fell, but remains well above where it was in the fall. Inflation remains a major problem, ranked second behind the top problem, labor quality.”
The optimism at 100.7 is still above the 51-year average at 98 but is down 4.4 points off the recent peak of 105.1 in December. The percent of owners expecting the economy to improve is down ten points from January to 37 percent. Only twelve percent of owners reported it is a good time to expand their business, down five points from January, the largest monthly decrease since April 2020. The percent of respondents reporting raising prices rose 10 points from January to 32 percent, the largest increase since April 2021.
NFIB Georgia State Director Hunter Loggins said, “Small business optimism may be above historical averages, but owners remain cautious about where things are going. This uncertainty, when combined with rising costs and a lack of qualified job candidates, makes it hard to own and operate a small business.”
On the positive side, the percent of owners reporting that inflation was their single most important problem in operating is down another two points from January and now below labor quality as the top issue. Labor costs were reported as the single most important problem for 12 percent, up three points from January and only one point below the all-time from December of 2021.
Lending still seems to be fine, with only 2 percent of owners reporting their last loan was more difficult to obtain than previous attempts. Nearly a quarter of all respondents reported borrowing on a regular basis, down three points from January but not a historically low number. There are also plenty of owners expanding their businesses, with nearly 60 percent reporting capital outlays in the last six months, with 37 percent spending on new equipment, 30 percent acquiring new vehicles and 13 percent improving or expanding facilities. Nearly 20 percent also report planning outlast for the next six months, only one point down from January.
The NFIB Research Center has been conducting quarterly surveys since 1973 and monthly surveys since 1986. This survey was conducted in February.
