Small Business Optimism on the Decline in 2025

The first part of 2025 has been interesting, to say the least. While small business confidence was soaring in the immediate aftermath of the presidential election, things seem to have taken a turn toward the pessimistic. The latest findings from the National Federation of Independent Business (NFIB) show falling optimism in February, with the Small Business Optimism Index dropping by 2.1 points to 100.7. In December, this number was 105.1. And the Small Business Uncertainty Index went up by four points, coming in at 104—the second-highest number ever recorded. Let’s talk through some of the key points the survey uncovered.

Top Survey Findings from Business Owners

• Net percentage of business owners anticipating economic improvement is down 10 points, to negative 37 percent.
• Percentage that sees the present period as a good time to expand is down 5 points, to 12 percent—the largest monthly decrease since April 2020.
• 16 percent say inflation is their biggest issue, which is down 2 points from January.
• Net 32 percent are raising prices, which is 10 points higher than January and the 3^rd highest since the survey began.
• Net 29 percent are planning on price hikes in the next 3 months. This is up 3 points from January and the highest level in nearly a year.
• Labor costs being reported as the most critical issue went up 3 points, to 12 percent. The highest level was 13 percent back in December 2021.

Hiring and Wages

Small businesses continue to face headwinds when it comes to hiring. According to the survey, 38 percent of owners noted they had job openings they couldn’t fill in February—which is the highest recording since August 2024. Additionally, a net 15 percent of small business owners will create jobs in the next 3 months. Labor quality is still a challenge, too: 19 percent of respondents see it as a leading issue, putting it higher than inflation. In terms of wages, 33 percent of owners say they raised compensation and 18 percent have plans to raise wages in the next 3 months.

Business Health

A brand-new question was asked in the survey this round, focusing on how owners saw the overall health of their business:

• Business health is excellent: 11 percent
• Business health is good: 55 percent
• Business health is okay: 27 percent
• Business health is bad: 6 percent

We’ll continue to keep you posted on the latest SMB news over at the Financial Pantry, your go-to source for all things small business. And if you’re looking for a lending solution for your business, check out all of ARF Financial’s loan offerings. Our lending process is quick and easy, and it doesn’t require a lot of documentation. Just fill out our online application and one of our seasoned loan consultants will help create the perfect loan to fit your business needs.