Small Business Optimism Down

Small business owners are still worried about business conditions over the next six months, according to the latest National Federation of Small Business (NFIB) Small Business Optimism Index. 

The NFIB Small Business Optimism Index declined 5.5 points in December to 95.9, falling below the average Index value since 1973 of 98. Nine of the 10 Index components declined and only one improved. Owners expecting better business conditions over the next six months declined 24 points to a net negative 16%.

“This month’s drop in small business optimism is historically very large, and most of the decline was due to the outlook of sales and business conditions in 2021,” said NFIB Chief Economist Bill Dunkelberg. “Small businesses are concerned about potential new economic policy in the new administration and the increased spread of Covid-19 that is causing renewed government-mandated business closures across the nation.”

Key findings from the study include:

• The NFIB Uncertainty Index decreased 8 points to 82.
• The percent of owners thinking it’s a good time to expand decreased 4 points to 8%.
• Sales expectations over the next three months declined 14 points to a net negative 4%.
• Earnings trends over the past three months declined 7 points to a net negative 14% reporting higher earnings.