Small-business optimism sinks to seven-month low

Small-business optimism sinks to seven-month low

The numbers: Small-business owners turned more pessimistic in December than they have been at any time since the onset of the coronavirus pandemic after a record new stage of the viral outbreak and Democratic electoral victories that promise a potentially dramatic shift in economic policy in Washington.

The closely followed optimism index compiled by the National Federation of Independent Business fell by 5.5 points to 95.9 last month, marking its lowest level since last May.

Read: The bad news keeps coming for the economy, but it might not be as bad as it looks

“This month’s drop in small-business optimism is historically very large, and most of the decline was due to the outlook of sales and business conditions in 2021,” said NFIB chief economist Bill Dunkelberg.

Just two months ago, the index topped 104 as it returned near a pre-crisis high.

What happened: Small businesses added jobs in December, but fewer owners said it was a good time to expand.

More firms also downgraded their sales forecasts for the next three months.

The NFIB is the nation’s largest small-business lobbying group.

The big picture: Small businesses that don’t deal directly with customers are mostly doing OK, but those that do are struggling under the weight of more government restrictions. Independent Main Street shops such as salons, retail stores and restaurants have been particularly hard hit.

A new round of federal aid approved last month and the promise of more help under President-elect Joe Biden will help tide companies over, but the economy is in for some tough times until the record spike in coronavirus cases recedes.

What they are saying? “Small businesses are concerned about potential new economic policy in the new administration and the increased spread of COVID-19 that is causing renewed government-mandated business closures across the nation,” Dunkelberg said.

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