March Small Business Optimism Declines

Date: April 12, 2016 Last Edit: April 13, 2016

NFIB Small Business Optimism Index Falls To Two-Year Low

NFIB’s Small Business Economic Trends report shows that in March, small business owners felt less optimistic about the economy. The index declined by 0.3 points to 92.6, its lowest monthly reading in two years. The index has turned “decidedly south”, NFIB points out, since December 2014, when it was at a high of 100 points. Four of the 10 components of the monthly index posted gains, however the numbers were still cause for concern. For instance, despite a 4% increase in the number of business owners expecting the economy to improve, the net percentage for March was still negative, at -17%. Small business owners surveyed in March cited “weak sales and a poor economy” as the top reason they believe “the current period is a bad time to expand.” However, the second-most frequent reason cited was “the political climate,” as this election season continues to create regulatory uncertainty for small businesses. Additionally, the NFIB found that “owners remain very pessimistic about the economy” in part because this view is “unfortunately reinforced by Fed Chair Yellen’s back peddling on the timing of the next rate hike.” Commenting on the results, NFIB Chief Economist Bill Dunkelberg cautioned that the small business sector is currently “underperforming, doing little more than operating in maintenance mode.” Although there has been “slow economic growth,” he warned that “there is no exuberance, no optimism and not much hope, the numbers make it clear.”

What This Means For Small Businesses

Reuters reported that NFIB Chief Economist Bill Dunkelberg said of the March index results, “Small business owners remain extremely pessimistic about the economy, and rightfully so. Cost-increasing regulations seem to multiply overnight and there is no clear end in sight.” Clearly, small business owners are struggling with economic and political uncertainty that appears unlikely to ease in the short-term.

Additional Reading

24/7 Wall Street also reports on the NFIB Small Business Optimism Index results.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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