US small-business optimism tumbles to 7-month low as COVID-19 restrictions curb activity
- The National Federation of Independent Businesses' optimism index slid 5.5 points in December to 95.9, according to a Tuesday release.
- The reading is the lowest in seven months and lands well below the 100.7 estimate from economists surveyed by Bloomberg.
- Nine out of the optimism index's 10 components declined. Only the
NFIB's measure of current inventory rose last month. Small businesseswere hit by the one-two punch of President Trump's loss and the worsening state of the coronavirus pandemic, Ian Shepherdson, chief economist at Pantheon Macroeconomics, said.
A popular gauge of small-business confidence in the US sank to a seven-month low in December as stricter lockdown measures and climbing daily case counts cut into economic activity.
The National Federation of Independent Businesses' index of small-business optimism fell 5.5 points last month to 95.9, according to a Tuesday release. The reading lands below the average index value since 1978 of 98 and marks the lowest level since May. Economists surveyed by Bloomberg expected the gauge to dip slightly to 100.2.
Nine out of the optimism index's 10 components declined, with only the NFIB's gauge of current inventory ticking higher to close out the year.
The association's uncertainty index fell eight points to 82, while its measure for general-business-condition outlook plunged 24 points to a net -16. The share of owners thinking it's a good time to expand fell 4 points to 8.
"Small businesses are concerned about potential new economic policy in the new administration and the increased spread of COVID-19 that is causing renewed government-mandated business closures across the nation," Bill Dunkelberg, chief economist at NFIB, said in a statement.
The backdrop for such businesses is set to improve in the near-term. Fiscal stimulus passed at the end of last month revives the Paycheck Protection Program, and direct payments included in the measure could lift spending at small businesses. Vaccine distribution and a more efficient reopening also serve to boost overall activity.
Still, the Tuesday report's details "make for grim reading," Ian Shepherdson, chief economist at Pantheon Macroeconomics, said. NFIB members were largely hopeful when President Donald Trump won the presidency in 2016, and his loss now seems to be weighing on the optimism index. Declines across other gauges of hiring, spending, and growth suggest the pandemic recession will likely get worse before stimulus and vaccination drives a full recovery, the economist added.
"This is not just the impact of his defeat in November; it's more likely to be a COVID hit," Shepherdson said. "The services
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