The owners of small businesses felt uncertain about the future in February as they continued to face challenges of persistent inflation and workforce.
The optimism index of the National Federation of the Independent Company fell 2.1 points in February to 100.7, just below economists forecasts for a reading of 101, according to Bloomberg data.
This reading marked the fourth consecutive month that the index has maintained above its average of 51 years of 98, but is a drop compared to a post-electoral summit of 105.1 reached in December.
“Uncertainty is high and increases on Main Street, and for many reasons,” said Bill Dunkelberg and Holly Wade of the NFIB in the report. “How future developments are resolved will shape the future of the economy.”
Tuesday’s report showed that 7 of the 10 index components have decreased, led by a loss of 10 points from the owners expecting better market conditions in the next six months. Meanwhile, the NFIB uncertainty index increased by four points to 104, reaching a record in February.
Among the owners who declared lower profits, 40% blamed lower sales, 11% said that the decline was due to labor costs and 9% cited the increase in materials.
Some 16% of the owners said that inflation was a major dilemma that weighs their business.
“Inflation remains a major problem, ranked second behind the first problem, the quality of work,” added Dunkelberg.
Consequently, 32% of business owners have increased their average selling prices, according to the report, marking the highest monthly increase since April 2021 and the third highest in the history of the survey. And 29% plan to increase prices over the next three months.
The workforce remains another headache, with 38% of all the owners of small businesses reporting employment openings that they could not fill in February, marking the highest reading since August 2024. And the cost to maintain staff also put pressure on the owners, 12% citing this problem.
In particular, the report has not made any reference to the prices, which have been the great concern of the stock market in recent weeks, while these new tasks come into force at a time when the economy in general shows signs of weakness.
Find out more: What Trump’s prices mean for the economy and your wallet
In a research note on Monday, for example, Goldman Sachs economists led by Jan Hatzius reduced their GDP forecasts from 2025 to 1.7% against 2.4%.
“The reason for the demotion is that our commercial policy hypotheses have become considerably more unfavorable,” wrote the company.
Dani Romero is Yahoo Finance journalist. Follow it on x @daniromerotv.
Read the latest financial and commercial news from Yahoo Finance