Unprecedented Surge in Small Business Optimism Post-Election
The NFIB Small Business Optimism Index witnessed a significant surge, reaching 105.1 in December. This 3.4-point increase marks the highest reading since October 2018, a phenomenon driven by improved economic expectations post the recent election.
The National Federation of Independent Business (NFIB) reported that this is the second consecutive month the index has surpassed the 51-year average of 98. An increase was observed in seven of the 10 index components, with economic expectations showing the most dramatic improvement – a 16-point rise to 52%, the highest level since Q4 1983.
“Small business owners feel more certain and hopeful about the economic agenda of the new administration,” said NFIB Chief Economist Bill Dunkelberg. “Expectations for economic growth, lower inflation, and positive business conditions have increased in anticipation of pro-business policies.”
The Uncertainty Index declined 12 points to 86, reflecting growing confidence among business owners. A noteworthy 20% of small business owners believe it’s a good time to expand their business, the highest reading since February 2020. However, the top concerns remain inflation at 20%, closely followed by labor quality at 19%.
- Key Highlights:
- Second consecutive month of the index surpassing the 51-year average
- Economic expectations rose 16 points to 52%
- 20% of small business owners believe it’s a good time to expand
- Top concerns: Inflation (20%) and labor quality (19%)
Source: NFIB