By Ethan Faverino |
The latest survey from the National Federation of Independent Business (NFIB) reveals that small business optimism in the U.S. dipped slightly at the start of 2026. The Small Business Optimism Index declined by just 0.2 points in January to 99.3, yet it remains above the 52-year average of 98.
Among the index’s 10 key components, 7 declined, while only 3 improved. The positive standout shift came in expectations for real sales volumes, which jumped by 6 points, with a net 16% of owners now anticipating stronger sales in the coming quarter.
However, uncertainty notably climbed, as the Uncertainty Index increased by 7 points to 91. Much of this rise stemmed from more owners expressing doubt about whether the current environment favors business expansion.
“While GDP is rising, small businesses are still waiting for noticeable economic growth,” stated NFIB Chief Economist Bill Dunkelberg. “Despite this, more owners are reporting better business health and anticipating higher sales.”
In Arizona and similar regions, a cautious mood persists, with many business owners hesitant to pursue expansion. NFIB Arizona State Director Chad Heinrich noted that ongoing tax-related uncertainties are adding to these concerns, while NFIB data shows taxes are the leading problem for 18% of business owners.
“The optimism index remains stable, but small business owners remain cautious about the future and whether it’s a good time to expand their operations,” explained Heinrich. “The limbo Main Street Arizonans find themselves in this tax season only exacerbates their uncertainty. Small business owners need tax conformity from policymakers now.”
A new addition to this month’s report, the Small Business Employment Index, registered 101.6 in January—down nearly a point from December but still 1.5 points above its historical average of 100 and marginally higher than the 2025 average. This suggests the labor market for small businesses remains relatively balanced.
According to the NFIB Monthly Jobs Report, overall business conditions showed improvement in owners’ self-assessments, with 14% now rating their operations as excellent (up 5 points) and fewer classifying them as only fair (down 7 points to 27%).
Investment activity picked up as 60% of owners reported capital expenditures over the past six months—the highest share since late 2023—mostly directed toward new equipment.
On the labor front, challenges eased somewhat, with businesses citing labor quality as their top issue; the share fell for the third straight month to 16%, and unfilled job openings dropped to 31% (still above the long-run norm).
Inflationary pressures linger, however, as 26% of owners reported raising prices in January, and 32% plan increases in the next few months.
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
