Inflation Continued to Weaken Small Business Sentiment in December 

Slowing Economic Activity Produced Broad-Based Declines in the Index

Source: Economics Group of Wells Fargo Bank, N.A.Summary Elevated Prices and Slowing Demand Weigh on Earnings and Optimism

  • The National Federation of Independent Business (NFIB) Small Business Optimism Index fell 2.1 points to 89.8 in December, a steeper decline than expected. December marks a full year of the index coming in below its long-term average of 98.
  • Eight of the index’s ten components fell in December. The wide-ranging fall in components helped erase the index’s surprise gain in November.
  • In what can be interpreted as good news for the path of inflation, the net percentage of small businesses raising their prices declined eight percentage points in November to 43%, the lowest level since May 2021. The net percentage of firms planning to raise prices over the next three months also dropped 10 percentage points to 24%.

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