Small Business Confidence Drops in December

The National Federation of Independent Business (NFIB) Small Business Optimism Index declined 5.5 points from November, to a reading of 95.9 in December. Falling below the historical average reading of 98, which was established in 1973. Nine of the 10 Index components declined with only one improving. The NFIB Uncertainty Index decreased 8 points to 82. Owners expecting better business conditions over the next six months declined 24 points to a net negative -16 percent. The percent of owners thinking it’s a good time to expand decreased 4 points to 8 percent. Sales expectations over the next three months declined 14 points to a net negative -4 percent. Concern about economic policy in the new administration and the increased spread of Covid-19 that is leading to renewed government mandated business closures have owners pessimistic about future conditions over the first half of 2021. The NFIB points out that the economy enters 2021 in much better shape than most expected half a year ago. The GDP has almost recovered to its 2019 level.