Small business optimism weakened in March as a sharp drop in reported profit trends and softening expectations for business conditions weighed on the outlook, according to the latest survey from the National Federation of Independent Business (NFIB).
The NFIB Small Business Optimism Index fell 3 points to 95.8, slipping below its 52-year historical average of 98 for the first time since April 2025. At the same time, the Uncertainty Index rose 4 points to 92, significantly above its long-term average of 68.
“The 20% Small Business Deduction and other supportive small business tax provisions in the Working Families Tax Cut Act have had many positives for small business owners,” stated NFIB Chief Economist Bill Dunkelberg. “However, the dramatic spike in oil prices has spooked consumers and owners alike. Small business owners are having to absorb those higher input costs and pass them along to their customers.”
Key Declines Drive the Drop in Optimism
The decline in the Optimism Index was driven primarily by two key components: the frequency of reports of positive profit trends, which plunged 11 points to a net negative 25%—the largest contributor to the overall drop—and the net percentage of owners expecting better business conditions, which fell 7 points to a net 11%, marking the third consecutive monthly decline and the lowest reading since October 2024.
Other notable movements included:
Employment Index – Fell from 103.5 to 101.6. While still above the 2025 average (101.2) and historical average (100), the 1.9-point decline signals moderation in labor market conditions.
Capital outlays – Only 16% of owners plan capital investments in the next six months, down 2 points and the lowest level since November 2009.
Sales – A net negative 5% reported higher nominal sales in the past three months (down 6 points), ending four months of improvement. Expectations for higher real sales volumes over the next quarter eased to a net 7%.
Inventory – Plans for inventory investment turned more cautious, reaching a net negative 5%, the lowest since May 2024.
Labor Market and Compensation Trends
Hiring activity showed signs of cooling. A seasonally adjusted 32% of owners reported job openings they could not fill (down 1 point), though this remains well above the historical average of 24%. Skilled worker openings stood at 27%, while unskilled openings rose slightly to 12%.
A net 12% of owners plan to create new jobs in the coming three months, unchanged from February and near the long-term average. Compensation pressures eased modestly: a net 33% reported raising compensation; plans to raise compensation in the next three months fell 4 points to a net 18%—the lowest since July 2025. Despite the declines, both actual and planned compensation remain above historical averages.
Pricing, Supply Chains, and Business Health
Actual price increases ticked up, with a net 25% of owners raising average selling prices (up 1 point and well above the historical average). Planned price hikes, however, declined 4 points to a net 24%. Supply chain disruptions affected 62% of owners to some degree (up 3 points), with most reporting only mild or moderate impacts.
When rating the overall health of their businesses, 13% called it “excellent” (up 1 point), 51% “good” (down 4 points), 30% “fair” (up 4 points), and 4% “poor” (down 1 point).
Top Business Problems and Credit Conditions
Taxes remained the single most important problem for 19% of owners (unchanged and still ranked #1), followed by labor quality at 15% (#2), and inflation at 14% (#3).
Credit conditions stayed relatively stable but tight. The net percent expecting easier credit held at negative 5%, while the average interest rate on short-term loans edged down to 7.9%. Only 24% of owners reported borrowing regularly, a historically low level. Just 11% viewed it as a good time to expand (down 4 points and below the historical average).
“Small business owners are certainly keeping a close eye on the price of oil,” added NFIB State Director Chad Heinrich. “As those cost pressures grow and Arizona’s officeholders dawdle on tax conformity, small businesses are doing everything they can to minimize price increases for their consumers and stay competitive. It’s essential that state policymakers give our small businesses certainty and fully conform with the provisions of the Working Families Tax Cut Act.”
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
Earlier this week, the Joint Economic Committee released its Monthly Fiscal Update, revealing that the federal government recorded a deficit of $164.10 billion in March 2026.
For the first half of FY26, cumulative deficits reached $1.169 trillion, meaning 32.01% of outlays were unfunded by revenues, with the government spending $1.47 for every dollar received in revenue.
The year-to-date deficit for FY26 is 10.60% lower than the $1.307 trillion recorded in the same period of FY25. Full-year deficits in FY25 totaled $1.776 trillion.
According to the most recent 10-year budget projections from the Congressional Budget Office (CBO), federal deficits are expected to total $1.853 trillion in FY26, $1.887 trillion in FY27, and $2.080 trillion in FY28.
In March, total federal net outlays amounted to $548.96 billion. Cumulative net outlays from the start of the fiscal year through March stood at $3.651 trillion.
This represents a 2.35% increase compared to the $3.567 trillion in net outlays for the same period in FY25. Full-year net outlays in FY2025 totaled $7.010 trillion. The CBO projects net outlays will reach $7.772 trillion in FY27 and $8.151 trillion in FY28.
Total federal net receipts in March were $384.86 billion, bringing year-to-date net receipts to $2.483 trillion. This marks a 9.84% increase from the $2.260 trillion in net receipts recorded in the comparable period of FY25. Full-year net receipts in FY25 were $5.235 trillion. The CBO forecasts net receipts of $5.596 trillion in FY2026, $5.885 trillion in FY27, and $6.071 trillion in FY28.
Key figures for March 2026 show net outlays of $548.96 billion, net receipts of $384.86 billion, and a deficit of $164.10 billion. For FY26 year-to-date through March, net outlays totaled $3.651 trillion, net receipts totaled $2.483 trillion, making the deficit $1.169 trillion.
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
Democrats keep attacking President Donald Trump’s Big Beautiful Bill Act of 2025, as a tax cut for the rich. But the data show that the average family GAINED roughly $2,000 on their lower tax bill for this year. Every Democrat in Congress voted no, even as they complained of a “middle-class affordability crisis.” Maybe that’s because $2,000 is peanuts to rich and famous limousine liberal Democrats. But not for the rest of us.
The goal of the Trump tax cut was simple: strengthen the economy with lower tax rates and let working and retired Americans keep more of what they earn. The early evidence confirms this is exactly what has happened. Initial IRS data shows that almost HALF of filers have already taken advantage of the bill’s middle‑income tax provisions.
Income taxes have become such an ingrained part of American life that many workers barely notice how much is snatched from their paychecks – payroll taxes, federal income taxes, state income taxes, etc. We see the net amount and forget the gross amount is what we actually earned. Because less is now taken out, the Trump tax cut functions like a pay raise.
So who is getting a pay raise from the One Big Beautiful Bill? Three major provisions were deliberately crafted to help working‑class and middle‑class Americans keep more of their hard‑earned dollars.
First, the law eliminated income tax on tipped wages, subject to certain caps. For millions of waiters, waitresses, bartenders, baristas, barbers, hairstylists, DoorDash drivers, tour guides, casino dealers, and counter staff at casual restaurants, this means a substantial share of their income is no longer taxed. In some of these occupations, tips make up more than half of total earnings, so the impact is enormous. These workers may lead rich and fulfilling lives, but none of them qualify as Trump’s “rich friends.”
Second, the bill eliminated federal income tax on overtime pay, again with income limits. This provision frees hourly workers from being taxed when they put in extra hours. Put differently, eliminating tax on overtime reduces the number of hours each day that hourly workers labor not for themselves or their families, but for the government. Given how many Americans are paid hourly, this provision overwhelmingly benefits people who are not wealthy.
Third, the tax bill reduces the tax RATE you pay. This incentivizes more work because the reward for getting a job and working more hours is more money.
Through March 25, more than 85 million individual tax returns had been filed. Of those, 37.5 million — 44% — saw an immediate reduction in their tax bill.
The bill also created a forward‑looking benefit for children: Trump Accounts. These accounts help young Americans begin investing early, giving them a head start on saving for education, starting a business, or building long‑term financial security. Children born between Jan. 1, 2025, and Dec. 31, 2028, are eligible for a $1,000 federal contribution, and early tax data shows strong enthusiasm. Roughly 2.6 million returns established Trump Accounts for more than 4 million children, and nearly one million qualified for the federal contribution.
When we account for all of these tax benefits, what we find is that far from being “tax cuts for the rich,” the One Big Beautiful Bill’s tax provisions actually reduced the tax bill paid by the middle class by roughly 14%. Meanwhile, the SHARE of federal income taxes paid by the richest 10% rose from 70% to 77% and the top 1% share rose from 38% to 40%.
If the rich are now paying a larger share of the tax pie, how is the Trump tax cut “a giveaway to the rich?” Maybe the left calls the Trump tax cut “One Big Ugly Tax Bill” because they want every one of us – not just the rich – to pay more taxes.
Stephen Moore is a contributor to The Daily Caller News Foundation, a senior fellow at America First Policy Institute, and a cofounder of Unleash Prosperity.
New data from the Common Sense Institute’s Arizona Jobs and Labor Force Update shows Arizona added 5,100 non-farm jobs on a seasonally adjusted basis in January, representing a modest 0.16% increase from December. This gain ranked the state 25th highest among all 50 states and Washington, D.C. Nationally, the U.S. economy added 160,000 jobs in January, with 44 states reporting month-over-month job gains.
However, on a year-over-year basis, Arizona’s labor market weakened significantly. The state lost 15,000 jobs compared to January 2025, marking a stark contrast to the national gain of +0.20%. Arizona ranked 43rd in year-over-year job growth, one of 24 states experiencing annual job losses. This marked the 22nd consecutive month of annual job growth below 2% in Arizona.
Revised data now indicate the state has been experiencing year-over-year job losses since August 2025—the first negative annual reading since September 2024 and the largest percentage decline since March 2021.
Arizona’s manufacturing sector provided a bright spot in January, adding approximately 600 jobs. The state was one of only 20 to add manufacturing jobs that month. However, on an annual basis, manufacturing employment continued to contract, down 0.7% from January 2025, with Arizona among 40 states losing manufacturing jobs over the year.
Unemployment in Arizona edged up slightly to 4.5% in January from a revised 4.4% in December, giving the state the 35th highest unemployment rate nationally. The state’s labor force participation rate held steady at 62%. Nationally, the unemployment rate declined modestly to 4.3% in January and has remained at that level through March 2026.
Sector performance in January varied. The “Other Services” sector led growth, adding 1,300 jobs (+1.3%), though it remains one of Arizona’s smaller supersectors with just 105,000 workers. Construction added 800 jobs month-over-month.
On an annual basis, the Mining and Logging sector continued to outperform, expanding 7.2% since January 2025. Meanwhile, the state’s largest supersector—Trade, Transportation, and Utilities—added only 200 jobs in January. The Information sector posted the weakest annual performance, declining 1.83% year-over-year.
While employment growth has slowed, wage growth in Arizona remained robust at the start of 2026. Average hourly wages rose $0.47 in January, ranking the state 9th nationally for monthly wage growth. Over the past year, Arizona’s average hourly wage increased by $1.10, placing it 29th in the U.S. for annual wage growth. Private Sector workers in Arizona now earn an average of $35.32 per hour, up from $34.22 a year ago.
Nationally, average hourly wages rose 0.35% in January and have continued growing, with the U.S. rate reaching 3.5% year-over-year as of March. Real (inflation-adjusted) wages in Arizona were up 1.2% as of January. Roughly in line with national trends, though they remain down 3.4% since April 2020.
Ethan Faverino is a reporter for AZ Free News. You can send him news tips using this link.
Friday’s strong jobs report smashed expectations and demonstrated that the economy and labor market are far stronger than the mainstream media suggests. The economy added 178,000 jobs in March, and the unemployment rate fell to 4.3 percent. Real wages rose again, increasing average American living standards.
After a rough February distorted by brutal weather across large parts of the country, the labor market has roared back. The naysayers who insisted that blip represented a crumbling economy were wrong, and the March data makes that plain.
Friday’s jobs report follows a strong ADP employment report on Wednesday that showed small businesses created 112,000 private-sector jobs in March. While the employment picture was more nuanced at bigger companies, small businesses remain the engine of the economy.
Thanks to President Donald Trump’s strong border policies, which have stopped the massive influx of the labor force, the nation is, by any measure, at full employment. The Kansas City Fed estimates that the number of jobs needed each month to keep the unemployment rate steady has fallen from around 150,000 to roughly 50,000.
Elevated oil prices are always a threat to small businesses, the labor market, and the broader economy. But the jobs report shows employers recognize today’s high gas prices as short-term pain that doesn’t alter the administration’s domestic pro-energy agenda, which represents a long-term structural shift. Expanded drilling, streamlined permitting, and a commitment to American energy independence mean that today’s prices are a temporary headache, not a permanent condition.
Meanwhile, the federal government workforce continues to fall. Since Trump took office, federal government jobs are down by 12% and at the lowest level since 1966, a huge victory over big government. Every position shed from the federal payroll is a resource freed up for the productive private economy — the part of the economy that actually creates goods, services, and lasting prosperity.
America’s resilient economy and labor market are a direct result of last year’s Republican tax cuts. The restoration of 100 percent immediate expensing — allowing businesses to write off capital investments in full the year they’re made — gives employers a powerful incentive to expand. The permanent 20 percent deduction for small business income and new interest deductions do the same. Together, these provisions are fueling exactly the kind of investment cycle that produces hiring and wage growth.
Guy Berkebile, chairman of Guy Chemical, a manufacturer south of Pittsburgh, explained the situation at an event hosted by Job Creators Network, Americans for Prosperity, Americans for Tax Reform, and the Pennsylvania Manufacturers Association, featuring U.S. Rep. Scott Perry this week: “Tax cuts leave us business owners with more money to invest in our employees and in expansion. Immediate expensing helps justify the costs of new projects by reducing the payback time.”
Small businesses like Guy Chemical can help Americans connect the dots between tax cuts and more jobs, higher wages, and a stronger economy.
The mainstream media will continue searching for ways to cloud any positive news. Our job is to look at the data clearly and call it what it is: a strong economy, a resilient labor market, and pro-growth policies that are working.
Alfredo Ortiz is a contributor to The Daily Caller News Foundation, CEO of Job Creators Network, author of “The Real Race Revolutionaries,” and co-host of the Main Street Matters podcast.
