The NFIB Small Business Optimism Index saw an increase of 3.4 points in December, reaching 105.1. This marks the second consecutive month above the long-term average of 98 and is the highest level since October 2018. Out of ten components in the index, seven improved, two declined, and one remained unchanged. Additionally, the Uncertainty Index decreased by 12 points to 86.
“Optimism on Main Street continues to grow with the improved economic outlook following the election,” said NFIB Chief Economist Bill Dunkelberg. “Small business owners feel more certain and hopeful about the economic agenda of the new administration. Expectations for economic growth, lower inflation, and positive business conditions have increased in anticipation of pro-business policies and legislation in the new year.”
While state-specific data was not available, NFIB State Director Dan Murray called on lawmakers to focus on reforms beneficial to small businesses and economic growth. “With the legislative session kicking off here in Topeka, lawmakers have an incredible opportunity to capitalize on the rising optimism among small business owners. Cutting taxes, reducing red-tape, and promoting a more transparent judicial system would go a long way in strengthening Kansas’ economy.”
Key survey findings revealed that a net 52% of owners expect economic improvement—a significant rise from November—and 20% consider it a good time to expand their business. The expectation for higher real sales volumes increased by eight points to a net 22%. Inventory investment plans also rose to their highest level since December 2021.
Compensation trends showed that a net 29% reported raising wages; however, this figure dropped three points from November. Only one percent of owners reported paying higher rates on recent loans.
Inflation remains a concern for many business owners with twenty percent citing it as their primary operational issue—unchanged from November—surpassing labor quality concerns by one point.
According to NFIB’s monthly jobs report, thirty-five percent of small business owners had unfilled job openings in December—a slight decrease from November—and fifty-five percent were actively hiring or attempting to hire.
In terms of capital expenditures over six months, fifty-six percent made outlays: thirty-seven percent on new equipment; twenty-four percent acquired vehicles; sixteen percent enhanced or expanded facilities; eleven percent spent on fixtures and furniture; seven percent purchased new buildings or land.
Despite these investments, sales reports indicated mixed results with no change from November’s net negative thirteen percent reporting higher nominal sales over three months.
Finally, borrowing needs were mostly satisfied with only two percent indicating unmet needs while sixty-five percent expressed no interest in loans.
The NFIB Research Center has been gathering Small Business Economic Trends data through quarterly surveys since late 1973 and monthly since 1986. This particular survey took place in December 2024.
