Small business owners see brighter days ahead.
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Despite the mayhem and uncertainty generated by President Trump’s tariffs and tariff threats, small business owners’ optimism rose last month.
That’s according to the Small Business Optimism Index from the National Federation of Independent Business (NFIB), a lobbying group for small business owners. The NFIB surveyed 5,000 of its members and received 485 usable responses in May.
The survey’s headline optimism number ticked up to 98.8 in May. That’s the first month-over-month increase since December and puts the index slightly above its 51-year average of 98. Seven of the 10 components that make up the index rose last month. Expectations for better business conditions and stronger sales mostly drove the gains. The stock market’s strong rebound, with the S&P 500 Index gaining over 6% in May, likely helped fuel small business confidence, suggesting the economic concerns sparked by Trump’s April “Liberation Day” tariff announcement were abating. At least for now, so long as “Trump Always Chickens Out” (TACO) catchphrase, mocking frequent tariff policy reversals, holds true.
Even so, small business owners have a new top gripe.
Taxes, much in the news as the House passed a big bill extending expiring tax cuts and containing new or expanded breaks, are now the leading concern for small-business owners. Eighteen percent of respondents cited them as their biggest problem. That’s the first time taxes have topped the list of complaints since December 2020. Worries over labor quality, which had held the top spot for the past three months, fell to second and is at its lowest level since April 2020.
Inflation remains a concern, too, with 14% of owners listing it as their biggest problem. That’s despite the fact that consumer prices rose just 2.3% in April from a year earlier, the lowest reading since February 2021. Financing costs, government regulation, and insurance availability all trailed far behind on the list of worries.
Other parts of the survey show a mixed picture.
Plans to increase capital outlays rose to their highest level this year, despite owners saying actual earnings are falling.
Fewer owners reported raising compensation last month, a sign that wage pressures, hand in hand with inflation, are easing. At the same time, job creation plans remain weak.
But the cheery outlook might not hold if unpredictability remains the norm. The NFIB’s Uncertainty Index has remained above 90 since July 2024, a level that it hadn’t previously breached since November 2020. Uncertainty remains high as tariff policy continues to shift by the day, complicating supply chain planning and pricing, and the Senate considers President Trump’s the House-passed “Big Beautiful Bill” containing tax and spending cuts.
“It’s hard to steer a ship in the fog,” the NFIB wrote in its report.
Bottom line: The NFIB survey reflects an economy that is still growing, but slowly, and a labor market that, while resilient, is softening.
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Source: https://www.forbes.com/sites/brandonkochkodin/2025/06/10/small-business-optimism-rises-in-may-despite-tariff-chaos/