NFIB Small Business Economic Trends - October 2024

Main Themes:

• Elevated Uncertainty: The NFIB Uncertainty Index reached a new 51-year high of 110, reflecting widespread apprehension among small business owners, particularly in anticipation of the recent election.

• Cautious Optimism: Despite the high uncertainty, the Optimism Index rose by 2.2 points to 93.7, driven by increases in most of its components. This suggests a hopeful but hesitant outlook for the future.

• Persistent Labor Challenges: Labor shortages remain a significant concern, with 35% of owners reporting unfilled job openings and difficulty finding qualified applicants. This contributes to concerns about labor costs and quality.

• Mixed Economic Signals: While the economy appears stable at a surface level, underlying concerns persist regarding the sustainability of growth fueled by government spending and borrowing.

Most Important Ideas/Facts:

• Uncertainty Impacts Investment: The report states, "Uncertainty always results in curtailment of hiring and capital spending." This underscores the negative economic consequences of the record-high uncertainty levels.

• Government Spending Concerns: The report highlights the potential dangers of the current economic growth model: "The economy cannot continue to finance its growth by borrowing more money."

• Election Impact Awaiting: The report acknowledges that the full impact of the election on small business optimism and investment spending is yet to be determined. This suggests a "wait-and-see" approach prevalent among owners.

• Labor Market Pressures: The report notes that labor demand is expected to remain high, potentially exacerbating existing labor shortages. This implies continued pressure on businesses to attract and retain qualified employees.

Key Data Points:

• Optimism Index: 93.7 (up 2.2 points from September)

• Uncertainty Index: 110 (up 7 points from September, highest reading recorded)

• Job Openings: 35% of owners report unfilled positions

• Plans to Increase Employment: 15% (unchanged from September)

• Plans to Make Capital Outlays: 22% (up 3 points from September)

• Sales Expectations: Net negative 4% expect higher sales volumes in the next three months

• Inflation Concerns: 23% of owners cite inflation as their single most important problem

Quotes:

• "The NFIB Uncertainty Index reached a new 51 year high reading at 110, a new level of “hand wringing” for small business owners." This quote vividly illustrates the unprecedented levels of uncertainty prevailing in the small business sector.

• "With the election over, much of their uncertainty will be resolved as the new Administration reveals their new management team and policy priorities." This highlights the anticipation surrounding the new administration and its potential impact on the business environment.

• "The economy cannot continue to finance its growth by borrowing more money." This emphasizes the unsustainable nature of the current economic growth pattern and the need for alternative strategies.

Overall, the October 2024 NFIB Small Business Economic Trends report reveals a complex and uncertain landscape for small businesses. While some indicators suggest cautious optimism, the record-high uncertainty levels and persistent labor market challenges create a sense of apprehension about the future. The coming months will be crucial in determining how the new administration's policies and the overall economic climate will impact small business sentiment and growth.