In January, small-business optimism in the United States took a nosedive as deteriorating profits and dwindling sales expectations weighed heavily on business owners. According to the National Federation of Independent Business, the overall index fell 2 points to 89.9, marking the sharpest monthly slide since December 2020.
Bill Dunkelberg, Chief Economist of NFIB, explained that small-business owners are continuing to make necessary adjustments in response to ongoing economic challenges. However, a more positive outlook on the future economy and economic policy would be needed to stimulate long-term investment spending. Currently, owner views about the future are not optimistic and financing costs remain high.
The share of owners planning to boost employment dropped significantly in January, reaching its lowest level since May 2020. Thirty-nine percent of small-businesses had job openings they were unable to fill, with an overwhelming majority citing a lack of qualified candidates as their biggest challenge. Despite inflation cooling slightly, a significant portion of owners still identified it as their single most important concern in managing their businesses.