April 13, 2020

By: Caity Witucki
Contributing Editor, Main Street Monday

Main Street Monday – Abrupt Turn in Small Business Optimism Ends 39-Month Historic Run

Despite growing concerns surrounding the COVID-19 outbreak, small business optimism remained high throughout most of March. According to the National Federation of Independent Business (NFIB), small-business-optimism was just a few points below its all-time high in the second week of March. However, small business optimism plummeted in the latter half of the month, resulting in the largest monthly decline in the survey’s history.

The latest NFIB survey showed 92% of small business employers had been negatively impacted by the COVID-19 outbreak by the end of March and about half said they could only survive for about two months under current business conditions. 

Here are the main takeaways from the March NFIB Small Business Optimism Survey:

  • Small Business Optimism Index fell 8.1 points in March to 96.4, the largest monthly decline in the survey’s history.

  • The Uncertainty Index rose 12 points in March to 92, the highest level since March 2017.

  • Reports of better business conditions in the next six months declined 17 points to a net 5%, which is the largest monthly decline since November 2012.

  • Real sales expectations in the next six months declined 31 points to a net negative 12%, the largest monthly decline in the survey’s history.

  • 13% of firms thought it was a good time to expand, a decline of 13 points from last month.

  • Job openings fell three points to 35%.

“Small businesses are living through the coronavirus pandemic right now and it’s hard to say what the severity of the disruption will be, but we do know they’re feeling the urgency,” says NFIB Chief Economist William Dunkelberg. “It is vital that these businesses have access to federal funds that are made available through the CARES Act to keep the doors open on Main Street.”

Although the Coronavirus Aid, Relief, and Economic Security (CARES) Act became law on March 27, 2020, the program’s rocky start has taken its toll on small business optimism. As more lending institutions gain the ability to do Paycheck Protection Program (PPP) loans, the sharp decline in optimism is expected to slow and flatten.

NFIB – Small Business Optimism Report