Small business owners were feeling uncertain about the future in February as they continued to deal with lingering inflation and labor challenges.
The National Federation of Independent Business’ optimism index fell by 2.1 points in February to 100.7, just below economist forecasts for a reading of 101, according to Bloomberg data.
This reading did mark the fourth straight month the index held above its 51-year average of 98 but is a drop from a post-election high of 105.1 reached in December.
“Uncertainty is high and rising on Main Street, and for many reasons,” the NFIB’s Bill Dunkelberg and Holly Wade said in the report. “How future developments are resolved will shape the economy’s future.”
Tuesday’s report showed 7 out of the 10 components of the index declined, led by a 10-point loss from owners expecting better market conditions in the next six months. Meanwhile, the NFIB’s uncertainty index rose four points to 104, reaching a record high in February.
Among the owners who reported lower profits, 40% blamed weaker sales, 11% said the decline was due to labor costs, and 9% cited rising materials costs.
Some 16% of owners reported that inflation was a major dilemma weighing down their business.
“Inflation remains a major problem, ranked second behind the top problem, labor quality,” Dunkelberg added.
As a result, 32% of business owners raised their average selling prices, according to the report, marking the largest monthly increase since April 2021 and the third highest in the survey’s history. And 29% plan to hike prices in the next three months.
Labor remains another top headache, with 38% of all small business owners reporting job openings they could not fill in February, marking the highest reading since August 2024. And the cost to keep staffing has also pressured owners, with 12% citing this issue.
Notably, the report made no reference to tariffs, which have been the stock market’s big worry over the last few weeks as these new duties take effect at a time when the broader economy is showing some signs of weakness.
Read more: What Trump’s tariffs mean for the economy and your wallet
In a research note on Monday, for instance, Goldman Sachs economists led by Jan Hatzius slashed their 2025 GDP forecast to 1.7% from 2.4%.
“The reason for the downgrade is that our trade policy assumptions have become considerably more adverse,” the firm wrote.
Dani Romero is a reporter for Yahoo Finance. Follow her on X @daniromerotv.
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