The National Federation of Small Business (NFIB) Optimism Index dropped by 5.5 points to 95.9 in December. It is the lowest reading since May 2020 and below the average index value of 98 since 1973. Two months ago, the index reached 104.
According to Bill Dunkelberg, the chief economist of the NFIB, the historically large decline was due to the outlook of sales and business conditions in 2021. The pessimism of small business owners was due to the resurgence of COVID-19 cases and the Democratic victory in the recent election The NFIB survey found that small businesses did add jobs in December. However, many owners did not think it was a good time to consider expansion. Also, many of them downgraded their sales forecasts for the first quarter of 2021. Most of the businesses impacted by the recent surge in COVID-19 infections were those that deal directly with customers.