A “chartist” looking at the data historically might conclude that the Index has clearly hit a top and is flashing a recession signal.
Ouch. The above line from this month’s NFIB monthly economic trends report doesn’t pull any punches regarding the state of sentiment among small businesses in the US. As the chart below illustrates, the NFIB’s overall index of small business optimism has declined for three straight months, extending what has been its largest peak to trough decline of the current economic expansion, and taking the index down to its lowest level since February 2014. Not only has the headline index declined for three straight months, but it has also missed expectations in each of those months.
The table to the right breaks down which issues small businesses consider to be their number one problem. Topping the list this month (like they do every other month) are the issues of Taxes and Government Regulation/Red Tape. Both issues saw the percentage citing them increase this month, taking the combined total up to 43%. Behind these two issues, Poor Sales saw the percentage citing it as the number one problem increase by two percentage points up to 13%. Back in November, this issue bottomed out at 9% but has seen a pretty steady increase over the last four months. As businesses have become increasingly worried about sales, concerns over the cost and/or quality of labor have declined by a proportionate amount.
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