U.S. small-business confidence declined for the third consecutive month in February, undoing much of the progress made following President Donald Trump’s election victory in November. The National Federation of Independent Business reported that its Small Business Optimism Index dropped by 2.1 points to 100.7 last month. This decline was in line with decreased consumer and business confidence, as well as a downturn in the stock market, erasing the previous gains known as the “Trump bump.” The NFIB’s Uncertainty Index also rose by 4 points to 104, the second-highest level on record.
NFIB Chief Economist Bill Dunkelberg commented that uncertainty among small business owners is increasing due to various factors, although he did not provide specific details. The volatile trade policies of the Trump administration, including fluctuating tariffs on Canada and Mexico, have stirred anxiety among businesses. Economists noted that this uncertainty was hindering companies from making future plans.
Both suspended and potential tariffs, as well as existing duties, have led consumers to anticipate rising inflation in the coming year. The NFIB survey revealed that the percentage of businesses increasing average selling prices surged by 10 points last month to 32%, with notable price hikes seen in various industries such as finance, wholesale, agriculture, retail, construction, and manufacturing.
Moreover, the proportion of businesses planning price increases rose by three points to 29%, the highest level in 11 months. The share of small business owners expecting an economic improvement plummeted by 10 points to 37%, while only 12% believed that the current time was favorable for expanding their businesses, marking the largest decline since April 2020.
(Source: Reuters, Reporting by Lucia Mutikani; Editing by Andrea Ricci)
