U.S. Small-Business Confidence Drops

WASHINGTON (Reuters) – U.S. small-business confidence dropped for a third straight month in February, wiping away much of the gains seen after President Donald Trump’s election victory in November, amid rising concerns over the administration’s trade policy.

The National Federation of Independent Business (NFIB) reported on Tuesday that its Small Business Optimism Index fell by 2.1 points to 100.7 last month. This decline mirrors decreases in both consumer and business confidence, as well as the stock market, all contributing to the erasure of the so-called “Trump bump.” The NFIB’s Uncertainty Index increased by 4 points to reach 104, the second-highest reading on record.

“Uncertainty is high and rising on Main Street, and for many reasons,” stated NFIB Chief Economist Bill Dunkelberg, without providing further details. Typically, small business owners lean Republican.

The Trump administration’s erratic trade policy, characterized by fluctuating tariffs against Canada and Mexico, has created anxiety among businesses. Economists note that this uncertainty makes it challenging for companies to strategize for the future.

Suspended tariffs, alongside threatened tariffs and imposed duties, have led consumers to expect higher inflation in the upcoming year and beyond.

The NFIB survey indicated that the percentage of businesses increasing average selling prices surged by 10 points last month, marking the largest increase since April 2021, now at 32%. Price increases were noted across finance, wholesale, agriculture, retail, construction, and manufacturing sectors.

Furthermore, the percentage of business owners planning price hikes climbed by three points to 29%, the highest level in 11 months.

However, the share of owners anticipating economic improvement dropped 10 points to 37%. Additionally, the percentage who believe now is a good time to expand their business fell by five points, the largest decline since April 2020, leaving it at 12%.