NFIB: Small business optimism remains at “historically high levels”

Expectations matter. Businesses invest and make plans based on their informed predictions of future events. That’s why we routinely report on surveys, like the National Federation of Independent Business (NFIB) Small Business Optimism Index. 

Last month, for example, we cited several surveys indicating solid expectations for growth in the new year.

Today’s [December 3] news continues the run of positive economic outlooks we’ve seen over the last couple of months (positive state revenue forecast, optimistic blue collar workers, rising consumer confidence, solid wage growth). The National Association of Business Economists (NABE) Outlook Survey anticipates continued economic growth.

So we were surprised to read an Associated Press account of “slippage” in small business optimism.

The fears of a slowing economy that sent stocks falling the past few months may be spreading to small business owners who have been quite optimistic in recent years…

The monthly survey that the advocacy group National Federation of Independent Business takes of its members showed a small dip in optimism during November and December, with expectations of lower sales in the coming months a key factor in the decline.

What changed? Well, going to the NFIB survey, not all that much.

The Small Business Optimism Index was basically unchanged in December, drifting down 0.4 points to 104.4. Job openings set a new record high, job creation plans strengthened, and inventory investment plans surged. On the downside, expected real sales growth and expected business conditions in six months accounted for the decline in the Index. Reports of higher worker compensation stayed near record levels, while reports of higher selling prices faded. Credit availability was not an issue. Over the past few months, owners’expectations for the future have tempered, while reporting continued solid economic activity. The Index remains at historically high levels, but can’t be expected to improve every month.

Read the survey for more information. Yes, there are some reasons for concern, but monthly surveys will always show some fluctuations and, as NFIB economists write, “can’t be expected to improve every month.” 

Perhaps a better lead might have been “optimism remains at historically high levels.”