Small-business confidence in the U.S. slipped for a third consecutive month in March, eroding most of the gains that followed President Donald Trump's election victory in November, amid rising concerns over the administration's trade policy despite early optimism about a potential business boost from expected tax cuts and deregulation.
The National Federation of Independent Business (NFIB) said on Tuesday its Small Business Optimism Index fell 3.3 points to 97.4, below the 51-year average and the biggest drop since June 2022. The slide mirrored declines in both consumer and business confidence in other recent surveys.
“The implementation of new policy priorities has heightened the level of uncertainty among small business owners over the past few months,” said NFIB Chief Economist Bill Dunkelberg. “Small business owners have scaled back expectations on sales growth as they better understand how these rearrangements might impact them.”
While the NFIB's uncertainty index eased, falling 8 points to 96, from what had been the second-highest reading on record in February, it remained well above historical averages.
The share of owners expecting better business conditions dropped 16 points, to 21%, the lowest since October and the biggest drop since December 2020. The net share of businesses expecting higher sales in the next three months dropped to 3%, also the lowest since before the presidential election.
The survey was taken before Trump announced sweeping tariffs on April 2 that were far steeper than had been expected, triggering declines in global stock markets amid fears that the resultant changes to the world trade order will trigger recessions, including potentially in the United States. Fed Chair Jerome Powell last week warned that tariffs could cause both inflation and slower economic growth.
"The impact of new tariffs is yet to be felt," the NFIB report said.
The NFIB survey showed the share of businesses raising average selling prices eased 6 percentage points from February to 26%, while the number planning to raise prices in the next three months ticked up to 30%, the highest in a year. Meanwhile, a net 12% of businesses reported plans to increase hiring in the next three months, the lowest in 11 months.
