The Latest Small Business Optimism Index Doesn’t Bode Well for California

Sacramento, CA…Two surveys released today don’t paint a pretty picture nationally or in California for the small-business economy.  As it does the second Tuesday of every month, the National Federation of Independent Business (NFIB) releases its latest Small Business Economic Trends (SBET) report (also known as the Optimism Index) on the state of the small business economy nationwide. Also, as it does around this time, the American Legislative Exchange Council (ALEC) releases its annual Rich States, Poor States report.

Today’s Optimism Index showed it below its 50-year average for the 27th consecutive month. Today’s Rich States, Poor States report showed California 47th among states for economic outlook.

“California’s consistently low ranking in the Rich States, Poor States report and others like it and the continued bad mood small businesses are in as expressed through our Optimism Index surveys stopped surprising years ago and are now the new normal, and that’s what’s sad,” said John Kabateck, California state director for NFIB. “Let me offer a couple of shots of Geritol for policymakers to consider, if they really want to make things better for the people who gave most of us our first job in life: 1. Congress needs to stop dithering and pass the Main Street Tax Certainty Act – now! — to keep the 20% Small Business Deduction in the federal tax code from expiring next year, a deduction that so many small business owners have come to rely on. 2. The California Legislature could do many things, but nothing bolder than rejecting Assembly Bill 2200 when it comes up for its first hearing April 23. But don’t hold your breath waiting for that to happen. After all what’s $500 billion a year for a universal health-care plan when you’re running a $73 billion state budget deficit.”

From NFIB Chief Economist Bill Dunkelberg on Today SBET Survey 

“Small business optimism has reached the lowest level since 2012 as owners continue to manage numerous economic headwinds. Inflation has once again been reported as the top business problem on Main Street and the labor market has only eased slightly.”

Highlights from Today’s Optimism Index Report 

  • The net percent of owners who expect real sales to be higher decreased eight points from February to a net negative 18% (seasonally adjusted).

  • Twenty-five percent of owners reported that inflation was their single most important problem in operating their business (higher input and labor costs), up two points from February.

  • Owners’ plans to fill open positions continue to slow, with a seasonally adjusted net 11% planning to create new jobs in the next three months, down one point from February and the lowest level since May 2020.

  • Seasonally adjusted, a net 38% reported raising compensation, up three points from February’s lowest reading since May 2021.

Keep up with the latest on California small-business news at www.nfib.com/california or by following NFIB on Twitter @NFIB_CA or on Facebook @NFIB.CA.

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For 80 years, NFIB has been advocating on behalf of America’s small and independent business owners, both in Washington, D.C., and in all 50 state capitals. NFIB is a nonprofit, nonpartisan, and member-driven association. Since its founding in 1943, NFIB has been exclusively dedicated to small and independent businesses and remains so today. For more information, please visit nfib.com.