WASHINGTON – Small business owners across America are feeling increasingly pessimistic about their prospects, with confidence levels hitting their lowest point in 11 months during March, according to new federal data released Tuesday.
The National Federation of Independent Business reported that its Small Business Optimism Index fell by 3.0 points to reach 95.8 in March, marking the weakest reading since April 2025 and dropping below the long-term historical average of 98.0 points.
Business uncertainty soared dramatically, with the survey’s uncertainty measure climbing 4 points to 92 – significantly higher than the typical reading of 68. This troubling trend mirrors recent consumer data from the University of Michigan, which showed consumer confidence plummeting to record lows in April.
The primary culprit behind the declining business sentiment appears to be rapidly escalating energy costs tied to ongoing Middle East tensions. Oil prices surged past $100 per barrel on Monday following U.S. military announcements of a naval blockade targeting Iranian shipping ports. Since the U.S.-Israeli conflict with Iran began in late February, crude oil prices have skyrocketed more than 35%.
“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,” explained 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.”
Business owners expressed growing pessimism about future earnings and revenue potential. The percentage of survey respondents anticipating improved business conditions plummeted 7 points to just 11% on a seasonally adjusted basis – the most negative outlook since October 2024 and representing the third straight month of declining expectations.
Economic experts suggest both small business and consumer confidence are unlikely to recover quickly given the volatile international situation and its impact on energy markets.
