(TNND) – Small business owners have been feeling pretty good since Donald Trump and congressional Republicans won big on Election Day.
The National Federation of Independent Business released another report Tuesday showing growing positivity, with the new NFIB Small Business Optimism Index registering its highest reading in more than six years.
“It was a seismic shift in the perception of small business owners or how they feel about small business conditions moving forward in 2025,” said Holly Wade, NFIB’s Executive Director of Research.
Small business owners are adamant that the 2017 tax cuts will not be allowed to expire this year now that Trump is back in office.
And Wade said small business owners expect a “reduction (of) the regulatory threat they’ve been enduring.”
The NFIB small business optimism index rose 3.4 points in December to 105.1. This is the second month in a row above the five-decade average of 98.
A month ago, the index rose eight points to 101.7. Wade said this was the biggest one-month increase in decades for their optimism index.
Wade said the just-released December optimism index built on November’s “historic surge.”
The NFIB Optimism Index is based on surveys of small companies in a wide range of industries. The NFIB has collected data on small business economic trends with quarterly surveys since 1973 and monthly surveys since 1986.
An NFIB index that measures uncertainty fell again in December, which is the direction they want to see in that index.
Wade said the NFIB saw a record level of uncertainty in October. Most small business owners were unsure of the road ahead, she said.
“So in October, we started at the top of the hill,” Wade said.
Since then, the NFIB’s uncertainty index has fallen 24 points and, while still elevated, is approaching normal levels.
The NFIB Optimism Index is constructed from 10 components. Last month, seven increased, two decreased and one remained unchanged.
But the bottom line, Wade said, was that the net percentage of owners who expected the economy to improve rose 16 points to a seasonally adjusted net of 52%.
This is the highest since the fourth quarter of 1983.
And the share of small business owners who believe it’s a good time to expand their business rose to its highest reading since February 2020.
Wade said more small businesses want to expand and more want to hire.
A seasonally adjusted net 19% of employers plan to create new jobs in the next three months, up one point from November.
The last time employment plans were this high was May 2023, according to the NFIB.
A seasonally adjusted 35% of small business owners reported jobs they could not fill in December.
Wade said labor quality is the top issue for nearly one in five small businesses, and construction and transportation businesses have the hardest time finding enough quality labor.
Inflation remains the main problem most cited by small businesses.
“It’s still a challenge,” she said.
The consumer price index, a popular gauge of inflation, will be released for December on Wednesday. November’s CPI rose at an annualized rate of 2.7%, a sharp drop from inflation’s peak of 9.1% in June 2022.
Wade said small business owners are feeling less pressure to raise wages for their workers, which can put a damper on their bottom lines. But the higher costs of supplies have been “a bit sticky for small business owners,” she said.
Inflation cooled enough to allow the Federal Reserve to begin moving interest rates in the other direction, with three cuts since September.
A Banker expert previously said he expects three more interest rate cuts in 2025, but inflation remains high enough that interest rates may not fall as quickly as expected.
Wade said it matters to small businesses, especially those that need to finance expansion projects, but high interest rates are not one of the main problems for small businesses.
