The National Federation of Independent Business (NFIB) announced on Oct. 8 that its latest Optimism Index, also known as the Small Business Economic Trends report, has recorded its 33rd consecutive month below the 50-year average. The report also showed that the uncertainty component rose by 11 points to reach a record high of 103.
This development is significant for small business owners, especially as Hawaii’s new tax reduction law (House Bill 2404) is expected to improve conditions. However, it remains unclear how much impact the law will have on business outlooks in the state.
Bill Dunkelberg, NFIB Chief Economist, said, “Small business owners are feeling more uncertain than ever. Uncertainty makes owners hesitant to invest in capital spending and inventory, especially as inflation and financing costs continue to put pressure on their bottom lines. Although some hope lies ahead in the holiday sales season, many Main Street owners are left questioning whether future business conditions will improve.”
Other findings from the SBET report include an average rate paid on short maturity loans of 10.1 percent—up by 0.6 percentage points from August and at its highest since February 2001. Thirty-four percent of all owners reported job openings they could not fill during the current period, which is down six points from August and marks the lowest reading since January 2021. Additionally, a net 32 percent reported raising compensation (seasonally adjusted), down one point from August and remaining at its lowest level since April 2021. Twenty-three percent of owners identified inflation as their single most important problem when operating their businesses; this figure is down one point from August but remains the top issue.
The SBET report is widely regarded as a key measurement of America’s small business economy and is used by institutions such as the Federal Reserve and Congressional leaders. The typical NFIB member employs between one and nine people with gross sales around $500,000 per year.
As small businesses await further developments related to Hawaii’s tax changes and broader economic trends, many remain cautious about making investments or expanding operations.
