Small Business Economy Optimism In US Falls To 3-Month Low: Report

By Sierra Campbell, Managing Editor for small.news

(small.news) — In September, United States small businesses felt less optimistic about the economy as expectations for unfavorable conditions in the next six months arise, according to Reuters.

Many small business owners have said they have or are planning to raise their prices, which does indicate that inflation isn’t slowing down any time soon. The National Federation of Independent Business reported that its Small Business Optimism Index dropped two points, hitting 98.8 in September.

This was the first reported decline in three months. The government shutdown and current lapse in government funding has stopped the collection and publishing of official economic data, according to Reuters, which has left investors and policymakers unsure of the economy’s health.

The shutdown entered its third week on Oct. 15, and has delayed the September employment report. However, September’s consumer price data should still be published soon to help the Social Security Administration create its annual cost-of-living adjustments for beneficiaries.

‘Uncertainty Is Very High’: Chief Economist

The NFIB reported that the survey’s “Uncertainty Index” rose seven points from August, hitting 100, which is the fourth-highest reading in over 50 years.

NFIB Chief Economist Bill Dunkelberg said, “Uncertainty is very high, the [President Donald Trump] administration has a lot of policy changes still in the air, lots of moving parts… Growth in the economy is solid, though driven, perhaps, more by AI-related investments than by spending that impacts Main Street firms.”

Rising Costs For Small Businesses Due To Tariffs

Small business owners who are expecting better conditions over the next six months decreased 11 points to only 23%. Those who took the survey offered complaints about higher beef prices, health insurance costs, and taxes. They also said potential clients have chosen to “delay or forgo repairs or improvements due to lack of confidence in the overall economy.”

When it comes to inflation, 14% of small business owners said it was their most important problem in operating their business. The price increases and supply chain issues that some small business owners are seeing could be due to President Donald Trump’s tariffs on imports, according to Reuters.

Trump recently threatened 100% duties on Chinese imports, for example. And around 31% of small business owners plan to raise prices within the next three months, which is an increase of five points from August.

Small Businesses Reporting Decline in Sales: Report

The NFIB report also shows that more small business owners are reporting a decline in their sales. Those who are expecting higher inflation-adjusted sales dropped four points, which means unsold merchandise could be piling up.

This can be a worrying sign for the U.S. economy. Dunkelberg reportedly said, “Solid consumption spending appears to be from the top third of the income distribution and the stock market keeps setting new record highest, producing capital gains income for shareholders.”