Small-Business Optimism Surges as Economic Expectations Hit 40-Year High

Confidence soars among small businesses as President-elect Donald Trump’s pro-growth economic agenda sparks high expectations for 2025.
Small-Business Optimism Surges as Economic Expectations Hit 40-Year High
People walk past small businesses in Doylestown, Pa., on Nov. 4, 2021. Matt Rourke, File/AP Photo
Tom Ozimek
Updated:
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Small-business owners are expressing renewed confidence in the economy on hopes of pro-growth policies of the incoming Trump administration, according to the National Federation of Independent Business (NFIB), whose latest survey shows that expectations for economic improvement in the year ahead have soared to a four-decade high.

The latest NFIB survey reveals that 52 percent of small-business owners expect the economy to improve, a 16-point increase from November and the highest reading since the fourth quarter of 1983. This surge reflects optimism not seen in decades as America’s small-business community anticipates a favorable economic environment under new leadership.

“Optimism on Main Street continues to grow with the improved economic outlook following the election,” NFIB chief economist Bill Dunkelberg said in a statement. “Small-business owners feel more certain and hopeful about the economic agenda of the new administration. Expectations for economic growth, lower inflation, and positive business conditions have increased in anticipation of pro-business policies and legislation in the new year.”

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The rebound in optimism extends beyond expectations for future economic performance. The NFIB Small Business Optimism Index—a measure of current conditions—rose by 3.4 points, to 105.1, in December. This marks the second consecutive month above the 51-year average of 98 and the highest reading since October 2018.

The percentage of owners considering it a good time to expand rose six points, to 20 percent (seasonally adjusted), the highest since February 2020, while the net percentage expecting higher real sales volumes increased eight points, to 22 percent—also a four-year high.

Inventory investment plans also saw an uptick, with a net 6 percent of owners planning to invest in inventories, the strongest reading since December 2021. Capital expenditure activity also showed resilience, with 56 percent of owners reporting outlays in the past six months, an increase of two points from November. Among these, investments in equipment, vehicles, and facility expansions were common, reflecting a readiness to grow in the year ahead.

Despite these positive trends, challenges remain. Labor shortages persist, with 35 percent of small-business owners reporting job openings they could not fill in December. Inflation continues to be a significant concern, cited by 20 percent of owners as their most pressing issue. However, the frequency of price hikes appeared stable, with a net 24 percent of owners raising average selling prices, unchanged from November.

Also, fewer small-business owners raised wages in December, with a net 29 percent reporting compensation increases, down three points from November. This marks the lowest level since March 2021 and a sign that upward wage pressure and inflation concerns may be easing.

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In addition, the NFIB’s uncertainty index dropped 12 points, to 86, signaling growing confidence among business owners following November’s election results.

According to Dunkelberg, the jump in small-business optimism reflects expectations that the incoming Trump administration’s policies—including promises of sweeping tax reforms and deregulation—could reduce operational burdens while boosting profits and growth.

Trump’s economic vision combines a pro-growth deregulatory agenda with aggressive measures to control inflation. His plan includes fixing lingering supply-chain snarls and slashing energy prices through expanded domestic oil and gas production under his “drill, baby, drill” policy.
Standing in some contrast to the NFIB report of a surge in sentiment among small businesses, consumer confidence dipped recently following a significant jump in the immediate wake of the November election. The relatively modest pullback in consumer confidence mostly reflects concerns about the persistence of inflation.
Tom Ozimek
Tom Ozimek
Reporter
Tom Ozimek is a senior reporter for The Epoch Times. He has a broad background in journalism, deposit insurance, marketing and communications, and adult education.
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