U.S. Small Business Marks an Ever-More Uncertain Mood as Election Looms

By Joshua Kirby

U.S. small businesses are feeling less certain about the future than ever before amid a cloudy political backdrop, a survey shows.

The National Federation of Independent Business said Tuesday that its small-business optimism index rose to 91.5 in September from 91.2 in August, broadly in line with economists' expectations. But that still leaves it below the long-term average, represented by a reading of 98. And the gauge of uncertainty rose 11 points to 103, marking the worst level ever recorded on the index.

"Small-business owners are feeling more uncertain than ever," NFIB chief economist Bill Dunkelberg said. "Uncertainty makes owners hesitant to invest in capital spending and inventory, especially as inflation and financing costs continue to put pressure on their bottom lines," he said.

The survey is the last before next month's presidential elections, the result of which remains difficult to predict, with Republican candidate Donald Trump and Democratic candidate Kamala Harris close in key swing-state polls.

"Small business owners typically lean Republican," Pantheon Macroeconomics' Ian Shepherdson wrote last month, noting that a more positive mood among small businesses tends to coincide with upswings in the Republican candidate's chances of making it to the White House.

Feelings around current conditions, including inflation and the jobs market, improved from the month before. Price rises remain owners' top concern, though fewer are reporting it as the primary issue facing their business. The number reporting that they are struggling to fill vacant positions also fell, reflecting some tightening in the jobs market.

But other areas showed signs of deterioration. The lowest proportion of owners so far this year reported higher sales over the past three months, suggesting a worsening economic backdrop. The Federal Reserve last month moved to cut interest rates in a bid to ease restrictions on spending and investment.

Write to Joshua Kirby at joshua.kirby@wsj.com; @joshualeokirby

(END) Dow Jones Newswires

October 08, 2024 06:14 ET (10:14 GMT)

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