Charts: U.S. Small Business Trends Q1 2024

The National Federation of Independent Business, an association of roughly 300,000 small U.S. businesses, publishes a monthly “Small Business Economic Trends” report (PDF). One component is an “optimism index,” wherein a sample of members are surveyed on their outlook, such as “plans to increase employment,” “plans to make capital outlays,” and “expect economy to improve.”

The results are then weighted and compiled into the “Small Business Optimism Index,” where 100 is the most optimistic.

In January 2024, the index decreased two points to 89.9 from December 2023 — marking the 25th consecutive month below the 50-year average of 98, indicating ongoing economic concerns among small business owners.

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Twenty-one percent of owner-respondents reported that quality of labor was their most important problem in operating their business, followed by inflation at 20%.

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Moreover, in January 2024, 14% of surveyed U.S. small business owners planned to increase employment in the coming three months, down two points from December.

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The NFIB survey asks members whether net profits in the prior three months were higher or lower than the same period in the previous year. The difference — the number of “higher” minus “lower” — is then compiled in an index. In January, the number of “lower” respondents was 30% more than “higher.”