U.S. small business optimism dropped significantly in March 2025 as concerns rose over economic conditions influenced by new federal tariff policies, according to the National Federation of Independent Business (NFIB).
The NFIB Small Business Optimism Index saw a decline of 3.3 points, reaching 97.4, falling slightly below the 51-year average of 98. The Uncertainty Index also fell by eight points from the previous month's second-highest reading to 96. Notably, business conditions and sales expectations were significant contributors to this decline.
NFIB's Chief Economist, Bill Dunkelberg, stated, "The implementation of new policy priorities has heightened the level of uncertainty among small business owners over the past few months." Dunkelberg noted that business owners have adjusted expectations about sales growth in light of the policy changes.
The survey revealed several findings:
- Taxes were a growing concern, with 18% of small business owners identifying it as their primary issue, the highest since November 2021.
- Expectations for better business conditions plummeted by 16 points to a net 21%, marking the most considerable drop since December 2020.
- The overall health of businesses saw diverse ratings: 11% of owners reported excellent health, 53% good health, 31% fair health, and 4% poor health.
- Labor quality remained the top issue, with 19% of owners expressing concern, followed closely by taxes.
- Expectations for higher real sales volumes dropped 11 points to a net 3%.
- Inflation, linked to higher input costs, was a key issue for 16% of business owners.
- The percentage of owners raising average selling prices decreased by six points to 26%.
- A seasonally adjusted net 30% planned price hikes in March.
- The ease of obtaining loans worsened, with 6% of owners reporting increased difficulty, the most substantial monthly jump since September 2023.
- Borrowing on a regular basis increased, reported by 28% of business owners.
Data for the NFIB survey is obtained monthly from a random sample of its members. The trend data dates back to the fourth quarter of 1973 for quarterly surveys and to 1986 for monthly surveys.
