NFIB: Small Business Survey: "Uncertainty Paralyzing Small Business Owners"

The latest issue of the NFIB Small Business Economic Trends came out this morning. The headline number for October came in at 94.9, up 0.8 from the previous month's 94.1. The index is at the 27th percentile in this series. Today's number came in above the forecast of 94.6.

Here is an excerpt from the opening summary of the news release.

Small business owners are rattled by uncertainty and unable to decide whether to expand, whether to hire, or whether to make other important decisions that might boost the economy, according to the National Federation of Independent Business (NFIB) Small Business Economic Trends report, released today.

“The data contained in this report shows record levels of uncertainty among small business owners, and it is tied directly to the election,” said NFIB President and CEO Juanita Duggan. “The result is economic inertia, with business owners unwilling to make the business decisions that would jumpstart the economy.”

The NFIB Small Business Optimism Index ticked up a meager 0.8 points to 94.9. Five of the 10 components posted a gain, three declined, and two remained unchanged in October. Nearly half of the respondents cited taxes or regulations and red tape as their “Single Most Important Business Problem.”

The first chart below highlights the 1986 baseline level of 100 and includes some labels to help us visualize that dramatic change in small-business sentiment that accompanied the Great Financial Crisis. Compare, for example the relative resilience of the index during the 2000-2003 collapse of the Tech Bubble with the far weaker readings following the Great Recession that ended in June 2009.

NFIB Optimism Index

Here is a closer look at the indicator since the turn of the century. The post-recession interim high of 100.4 occurred in December 2014.

NFIB Optimism Index Since 2000

The average monthly change in this indicator is 1.3 points. To smooth out the noise of volatility, here is a 3-month moving average of the Optimism Index along with the monthly values, shown as dots.

NFIB Optimism Index Moving Average