Small Businesses Remain Optimistic, but Uncertainty on the Rise: Survey

A hiring sign at the Fashion Centre at Pentagon City shopping mall in Arlington, Va., on Jan 3, 2024. Madalina Vasiliu/The Epoch Times

Many small-business owners continued to hold positive expectations about future business conditions even though optimism declined on a monthly basis in January, according to a recent survey conducted by the National Federation of Independent Business (NFIB).

“The NFIB Small Business Optimism Index fell by 2.3 points in January to 102.8,” the association said in a Feb. 11 statement.

Despite the monthly decline, the January figure was the second highest since October 2020, bested only by the recent December 2024 reading of 105.1.

“Small-business owners greeted the new year with a surge in optimism. 17 percent (seasonally adjusted) now view the current period as a good time to expand substantially, up from just 4 percent a few months ago,” the survey report said.

“A seasonally adjusted net 20 percent expect real sales gains compared to a net negative 18 percent a few months earlier. Better business conditions were expected by a seasonally adjusted net 47 percent, up from a net negative 13 percent just four months ago.”

With the Trump administration in power, small-business owners are “anxiously watching” for the potential preservation of the Tax Cuts and Jobs Act (TCJA), the report noted. Signed by President Donald Trump in 2017, the act offered various benefits to taxpayers such as deductions and credits. The TCJA is set to expire at the end of this year, on Dec. 31.

Business owners are also looking forward to a reduction in regulations under the Trump administration, “especially those that increase the cost of production but produce little benefit to users and consumers,” according to the report.

NFIB chief economist Bill Dunkelberg said that “overall, small-business owners remain optimistic regarding future business conditions, but uncertainty is on the rise.”

The Uncertainty Index jumped 14 points, to 100, in January, following two months of decline, hitting the third-highest reading ever recorded.

Hiring challenges “continue to frustrate Main Street owners as they struggle to find qualified workers to fill their many open positions. Meanwhile, fewer plan capital investments as they prepare for the months ahead,” Dunkelberg said.

Meanwhile, the NFIB’s monthly jobs report showed that 35 percent of small-business owners had job openings that they failed to fill last month.

Out of the 52 percent who hired or attempted to hire in January, 90 percent said they found few or no qualified applicants for their job posts.

“The difficulty in filling open positions is particularly acute in the transportation, construction, and manufacturing industries,” the report said. “Openings were the lowest in the agriculture and finance industries.”

Optimistic Outlook, Tariffs

A Jan. 7 report from JP Morgan found that almost two-thirds of middle market executives in a survey held an optimistic view about the U.S. economy in 2025.

While 74 percent of leaders expect revenues to jump in the coming year, 65 percent foresee higher profits, and 51 percent intend to expand the workforce. These responses came even as 77 percent of businesses said they were seeing rising costs.

“Leaders are optimistic and focused on growth for 2025. Recession concerns have dropped as businesses, consumers, and markets have handled a period of elevated inflation and interest rates better than expected,” said Ginger Chambless, head of research and commercial banking at JP Morgan.

“Confidence in the soft-landing scenario has increased, and business leaders are facing forward with a positive mindset.”

Meanwhile, businesses are facing uncertainty surrounding the potential impact of tariffs imposed by the Trump administration.

The Trump administration recently announced a 25 percent tariff on steel and aluminum imports, which is set to take effect next month. Previously, a 10 percent additional tariff was imposed on China to address the fentanyl crisis facing the United States.

Earlier this month, Trump announced 25 percent tariffs on Mexican and Canadian imports but paused the implementation for 30 days after negotiating with the nations.

According to a post by the U.S. Chamber of Commerce, the expansion of tariffs poses challenges for small businesses, especially those that rely on international supply chains.

Neil Bradley, executive vice president at the Commerce Chamber, recommended that small businesses assess their supply chains.

“Can you still afford the product? Can you pass along the costs? Can you source the product from somewhere else?” he asked.

Making sufficient preparation to deal with quick tariff changes helps businesses reduce the negative fallout of supply chain disruptions, the post said.