Many small business owners show low optimism for the future

The National Federation of Independent Business (NFIB) Small Business Optimism Index reached the highest reading of the year in May at 90.5, a 0.8-point increase but still the 29th month below the historical average of 98. The Uncertainty Index rose nine points to 85, the highest reading since November 2020; 22% of owners reported inflation was their single most important problem in operating their business, unchanged from April and the top business problem among owners.

“The small business sector is responsible for the production of over 40% of GDP and employment, a crucial portion of the economy,” said NFIB Chief Economist Bill Dunkelberg. “But for 29 consecutive months, small business owners have expressed historically low optimism and their views about future business conditions are at the worst levels seen in 50 years. Small business owners need relief as inflation has not eased much on Main Street.”

NFIB State Director in Kansas, Dan Murray, said: “There’s no doubt that the small business economy is struggling. Tax relief is a critical priority for our members, both here at the state level and the federal. This week, as our job creators descend on our nation’s capital, they’re asking Congress to make the Small Business Deduction permanent. In this challenging and uncertain economic environment, we need lawmakers here in Topeka and in Washington, D.C. to stand up for Main Street.”

Among the key findings: a net negative 8% (seasonally adjusted) of owners viewed current inventory stocks as “too low” in May, down four points from April and the lowest reading since October 1981.