August 2025: Small Business Optimism Improves Again
For well over a year, virtually all of our economic indicators flashed “recession.” However, it didn’t happen, at least not yet. Now it’s looking more like a “jobless recovery” from an “almost recession.” The stock market is hitting record highs, gold set a new record high, corporate earnings are very good, consumer spending is solid, and inflation is subdued.
In this context, the Small Business Optimism Index has managed to break out of its funk, running below 99 from October 2021 to October 2024, then rising to over 105 in December 2024. The current reading of 100.8, while lower than late last year, is above the 51-year average of 98.
As good as all that sounds, that’s not the whole story. Hiring remains weak, and labor quality is the top business problem. Unfilled job openings are disappearing, but not because they are filled. Actual and planned capital spending remain weak, hopefully the new depreciation rules and permanent 20% small business deduction will stimulate some investment spending. Owners are optimistic about improving business conditions by year end, hopefully stronger sales and more favorable tax rules. For now, the economy is on a good footing, but small business owners are hoping that their “uncertainties” will be favorably resolved.