Small business optimism is way down, NFIB says in new report

Small businesses are less optimistic after nearly a year of pandemic life, according to a new report from the National Federation of Independent Business.

The NFIB Small Business Optimism Index fell 5.5 points in December, to a below-average mark of 95.9. The national index’s value had averaged a 98 level since 1973, NFIB said in its news release.

Eileen Kean. (File photo)

“New Jersey still has a 25% capacity limit in place on restaurants, gyms, amusements and event venues almost one year after the first shutdowns,” NFIB New Jersey State Director Eileen Kean said in a prepared statement. “Those businesses are on the brink of failure, wondering if they can make it until the vaccine distribution is widespread. That results in great uncertainty and endangers overall economic recovery, so a top priority for lawmakers should be how to rescue small business.”

Not only did nine of the 10 index components decline, against only one improvement, the number of owners expecting better business conditions over the next six months fell 24 points, to a net of -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,” NFIB Chief Economist Bill Dunkelberg said in a statement. “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.”

Other notes from the study:

  • 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 -4%;
  • Earnings trends over the past three months declined 7 points, to a net -14% reporting higher earnings;
  • Owners reporting raising compensation came in at 21%, while 14% plan to do so;
  • Owners reporting capital outlays in the last six months totaled 52%, while only 22% plan outlays in the next few months.

Click here for the full report.