Small-business optimism holds just below average as owners wait out uncertainty
Main Street owners report weak earnings and tough credit, but more of them say now is a good time to expand.
WASHINGTON — Confidence among America’s small-business owners barely moved in October, hovering just below its long-term average as owners contend with weak earnings, high costs and uncertainty about the economy, according to a survey released Tuesday.
The National Federation of Independent Business said its Small Business Optimism Index slipped 0.1 point to 97.8 in October. That is slightly below the index’s 53-year average of 98.0, according to the NFIB’s monthly report.
“There was little change in optimism among small businesses in October as owners navigated enduring challenges, though there were some encouraging developments,” NFIB Chief Economist Bill Dunkelberg said.
Mixed signals
Of the 10 components that make up the index, four rose, five fell and one was unchanged.
The share of owners who said it was a good time to expand rose 4 points to 11%. A net 18% of owners said they plan to add workers, up 1 point from September.
Other measures weakened. A net 23% of owners reported falling earnings, 3 points worse than in September. The share planning capital outlays fell 1 point to 21%. Owners also grew more pessimistic about borrowing, with a net 5% expecting credit to be harder to get, down 2 points.
The survey was conducted in October, before the midterm elections, and drew 759 usable responses from a sample of 10,000 NFIB members.
A slide since summer
October’s reading continued a slow decline. The index fell 0.8 point in September to 97.9, a three-month low. In that report, the NFIB’s Uncertainty Index rose to 90, far above its historical average of 68.
Small employers have been squeezed from several directions this year. Fuel prices jumped after the U.S. war with Iran began in late February, raising costs for businesses that rely on trucking and deliveries. Inflation has stayed well above the Federal Reserve’s 2% target, and the Fed raised interest rates in September, making loans more expensive.
In September, unfilled job openings fell 3 points to 32%, and a net negative 7% of owners reported actual employment changes, the weakest reading since June 2025.
Bigger picture
The broader economy has held up better than many owners’ outlook would suggest. Employers added 165,000 jobs in October, far above forecasts, and the economy grew at a 3.4% annual rate in the third quarter, the Bureau of Economic Analysis reported.
But much of that growth has come from consumer spending and heavy investment by large companies in artificial intelligence. Small firms have had a harder time passing along higher costs to price-sensitive customers.
Compensation measures in the survey remain above their historical averages, a sign that small businesses are still paying more to attract and keep workers in a tight labor market.
Policy changes ahead
Democrats will take control of both chambers of Congress in January after their midterm victories. Small-business groups are watching for any changes to last year’s tax law, which made permanent a deduction for owners of pass-through businesses such as partnerships and S corporations.
The IRS announced last week that businesses will be able to expense up to $2.64 million in equipment purchases in 2027 under Section 179, up from $2.56 million.
The NFIB’s next optimism report, covering November, will be the first to reflect owners’ views after the election. The group releases its survey on the second Tuesday of each month.
