Small business optimism falls sharply in December; Washington legislators consider business relief.

Small business optimism fell sharply in December, according to the latest NFIB Small Business Optimism Index

The NFIB Small Business Optimism Index declined 5.5 points in December to 95.9, falling below the average Index value since 1973 of 98. Nine of the 10 Index components declined and only one improved. Owners expecting better business conditions over the next six months declined 24 points to a net negative 16%.

“This month’s drop in small business optimism is historically very large and most of the decline was due to the outlook of sales and business conditions in 2021,” said NFIB Chief Economist Bill Dunkelberg. “Small businesses are concerned about potential new economic policy in the new administration and the increased spread of COVID-19 that is causing renewed government-mandated business closures across the nation.”

As the charts below show, the drop is widespread across indices and marks a reversal of a trend of growing optimism.

While it’s possible to overstate the importance of these surveys, expectations do matter. The decline follows December’s disappointing jobs report and the spike in our state’s UI filings.

The Washington Research Council reports on policies state legislators are considering to provide relief.