Small Business Falls Sharply in March — Evening Brief – 04.14.26

Small business sentiment deteriorated in March, with the NFIB Small Business Optimism Index falling 3.0 points to 95.8, according to the National Federation of Independent Business (NFIB). The reading sits below the 52‑year average of 98.0 for the first time since April 2025, reflecting growing caution amid rising input costs and weaker sales trends. 

At the same time, the Uncertainty Index jumped 4 points to 92, well above its historical average of 68, signaling elevated concern among small business owners about the economic outlook. 

“The 20% Small Business Deduction and other supportive small business tax provisions in the Working Families Tax Cut Act have had many positives for small business owners,” said NFIB Chief Economist Bill Dunkelberg. “However, the dramatic spike in oil prices has spooked consumers and owners alike. Small business owners are having to absorb those higher input costs and pass them along to their customers.” 

Profit trends deteriorated sharply, with the net share of owners reporting positive profit trends falling 11 points to negative 25%, the largest drag on the index. Expectations for better business conditions declined 7 points to a net 11%, marking the third consecutive monthly drop and the lowest level since October 2024. 

Labor indicators also softened. The Employment Index fell to 101.6, while a net 18% of owners plan to raise compensation over the next three months, down 4 points and the lowest since July 2025. 

Capital spending intentions weakened, with just 16% planning outlays—the lowest since 2009—while a net negative 5% reported higher sales, ending four months of improvement. Inventory plans also declined in tandem with weaker demand expectations. 

Price pressures remained elevated, with a net 25% of owners raising selling prices, even as planned price increases moderated.