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Small business optimism dipped below its 52-year average for the first time in a year in March, driven by the Iran war and a subsequent surge in oil prices, the National Federation of Independent Business (NFIB) said Tuesday (April 14).
The NFIB Small Business Optimism Index fell 3.0 points in March to 95.8. That brought the index below its historical average of 98.0 for the first time since April 2025, NFIB said in a Tuesday press release.
NFIB Chief Economist Bill Dunkelberg said the negative impact of oil prices on small business confidence outweighed the positive effect of the 20% Small Business Deduction and other small business tax provisions in the Working Families Tax Cut Act.
“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.”
NFIB said the largest contributors to the drop in optimism were an 11-point decline in the frequency of reports of positive profit trends and a 7-point decline in the net percent of owners expecting better business conditions.
NFIB noted that the last time small business optimism fell below its historical average—April 2025—the group attributed the decline to new policy priorities, heightened uncertainty, and concern about taxes reaching a 3.5-year high.
In Tuesday’s release, NFIB said its Uncertainty Index remained well above the historical average of 68. The index rose 4 points to 92.
NFIB’s Research Center said the consequences of the Iran war have weighed on optimism among both small business owners and consumers.
“A resolution of the conflict will eliminate supply chain problems, lower the price of oil, and all other related products. In the meantime, uncertainty reigns.”
NFIB also referenced reporting from March 25 that retailers were cautioning a lengthy war in Iran could mean higher prices in stores. Retailers pointed to added costs of fuel and freight, interrupted supply lines, and weaker demand among consumers facing a higher cost of living.
Separately, on April 6, the Institute for Supply Management’s Services PMI Index showed that the measure of prices paid for services and materials rose to the highest level since October 2022. ISM said that while businesses reported some relaxation on tariffs, the war in Iran had driven up energy prices.
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