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Key Takeaways
- The Small Business Optimism Index declined to 98.8 in September as uncertainty surged due to shifting U.S. government policies.
- The uncertainty index reached its fourth-highest level in the survey’s history, as business owners expressed concerns about supply chains, inflation, and inventory levels.
- More business owners said they plan to raise prices, while small business hiring plans were at their highest levels since January.
Small business owner optimism in September sank to its lowest level in three months as concerns mount about the direction of the U.S. economy.
The Small Business Optimism Index declined to 98.8, its lowest level since June, as owners expressed fears about future sales levels, inflation, supply chain disruptions and inventory levels, according to the monthly survey by the National Federation of Independent Business.
Business owners were concerned enough about the economy to push the survey’s uncertainty index up seven points to hit 100, the fourth highest reading ever in the survey’s 51-year history.
Why This is Important for You
Small businesses represent a significant portion of the U.S. economy, meaning that owner observations and sentiment can have a substantial impact on the economy’s trajectory.
Business owners are hoping for clarity on tariffs and other economic policies from the Trump administration. The September survey revealed that only 23% of business owners anticipate improved business conditions in the future, a 11 percentage point decline from August.
“While most owners evaluate their own business as currently healthy, they are having to manage rising inflationary pressures, slower sales expectations, and ongoing labor market challenges,” NFIB Chief Economist Bill Dunkelberg wrote in the report. “Although uncertainty is high, small business owners remain resilient as they seek to better understand how policy changes will impact their operations.”
Business Owners Expect Supply Chain Disruptions, Price Increases
Supply chain disruptions were a problem for 64% of small businesses, an increase of 10 percentage points from August levels. Along those same lines, 7% of business owners reported that inventory levels were too low, reflecting the largest monthly drop in the survey’s history.
Nearly a quarter of small businesses reported raising prices in September, a three percentage point increase, while 31% indicated plans to raise prices in the next three months.
Still, the report showed that business owners had some optimism about future conditions. Hiring plans were at their highest levels since January, while the number of business owners reporting profits versus those reporting losses was at the highest point since 2021.
The report doesn’t reflect business owner concerns about the federal government shutdown, which began on Oct. 1, after the conclusion of the September survey.
