The National Federation of Independent Business, an association of nearly 300,000 American small businesses, publishes a monthly report titled “Small Business Economic Trends” (PDF). One item is the Optimism Index, where a sample of members are polled about their expectations, such as “plans to increase employment,” “plans to increase capital expenditures,” and “expect the economy to improve.”
The results are then weighted and aggregated into a “Small Business Optimism Index,” where 100 is the most optimistic.
In January 2024, the index fell two points to 89.9 compared to December 2023 — the 25th consecutive month below the 50-year average of 98, indicating ongoing economic concerns among small business owners.
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21% of business owners reported that labor quality was their most important issue in running their business, followed by inflation at 20%.
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Moreover, in January 2024, 14% of small business owners surveyed in the United States planned to increase employment in the next three months, down 2 points from December.
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The NFIB survey asks members whether net earnings in the previous three months were higher or lower than the same period the previous year. The teams — the number of “highest” minus the “lowest” — are then compiled into an index. In January, there were 30% more “bottom” respondents than “top” respondents.
