Optimism among U.S. small business owners reached its highest level in more than three years last month, driven by hopes that Donald Trump's return to the presidency will lead to economic policies expected to boost growth.
The National Federation of Independent Business (NFIB) reported that its Small Business Optimism Index rose eight points in November to 101.7, the highest reading since June 2021. The rise was the largest ever. Meanwhile, the group's uncertainty index fell by 12 points, reflecting easing of concerns after the presidential election.
“The election results signal a major shift in economic policy and are increasing optimism among small business owners,” said Bill Dunkelberg, chief economist at NFIB. “Owners are particularly excited about tax and regulatory policies that will not only ease inflationary pressures but also promote strong economic growth.”
The report highlighted widespread improvements across the index's components. The outlook for economic conditions in coming months rose 41 points, the biggest monthly rise since the NFIB began collecting data in 1986, and the index's highest level in more than four years.
A net 14% of respondents said they believe now is a good time to expand, citing expectations for a loosened tax and regulatory environment under the second Trump administration.
Confidence in future sales has also been significantly strengthened. The net share of owners forecasts an increase in sales, a notable reversal from the consistent pessimism since early 2022. The last time expectations were this high was at the beginning of the pandemic.
Despite the optimism, many companies continued to grapple with persistent challenges. Inflation and difficulty finding qualified workers remained major concerns. Approximately 28% of respondents said they were planning to raise prices within the next three months, the highest percentage since May. Meanwhile, 48% said there were few or no qualified applicants for open positions.
Still, hiring intent showed some improvement. A net 18% of business owners say they plan to create new jobs in the next three months, an increase of three percentage points from October.
The results confirm a newfound confidence among small business owners, who are looking forward to potential policy changes aimed at boosting growth and easing economic pressures.
