Small businesses expecting better sales but still weighed down by high uncertainty

(TNND) — Small business optimism has remained essentially flat over the last several months, with high uncertainty weighing on owners despite reports of better business health and expectations of higher sales.

The National Federation of Independent Business’ January optimism index, released Tuesday, registered a 99.3.

That’s down from 102.8 a year earlier but hovering above the long-term average of 98.

The previous month registered a 99.5.

“What we’re seeing is, I would say, decent conditions for small businesses, consistency at a level that’s not great, but also something that small businesses are OK with, even as we hope for more,” said Peter Hansen, the director of NFIB’s research and policy analysis.

The NFIB’s optimism index is based on surveys from small companies across a broad scope of industries.

Hansen said small businesses went into 2025 with a lot of optimism but faced more challenges than expected.

Now, he said, a cloud of uncertainty is hanging over business owners who might be a little bit hesitant to invest or a little unsure of sales projections.

“They don’t quite know what overall economic conditions are going to be like, what kind of shocks they might be dealing with that they don’t want to be dealing with throughout 2026,” Hansen said. “If there’s a lot of stability in the market, policy is consistent, don’t have crazy … international strife, then I think you’ll see uncertainty fall and optimism tick up.”

Taxes were mentioned as the top problem by a plurality of small businesses, but taxes, inflation, labor quality and cost/availability of insurance all generated between 12% and 18% of responses as the single most important problem.

Hansen said NFIB saw concerns pop last month over insurance, which he said might be partially a symptom of the rising costs of Obamacare.

There was a mixed bag under the hood of the overall optimism index, which barely moved from December.

Of 10 components, three increased and seven decreased.

None of the components moved downward by much, so a meaningful increase in expected real sales volume balanced out the overall index.

More owners graded their business health is excellent, while fewer reported it as just fair.

Fewer business owners were raising prices in January. But price increases are still higher than historical norms, showing steady pressure from inflation.

“We’re still comfortably above kind of average historical price changes,” Hansen said.