Small business owners expecting better business conditions and sales. Photo by Ketut Subiyanto

SACRAMENTO REGION, CA (MPG) - Small business owners expecting better business conditions and sales boosted the National Federation of Independent Business’s latest Small Business Optimism Index numbers, released on June 10, to 98.8, slightly above the 51-year average of 98.

The latest index also gave labor shortages and labor quality and inflation a break from their occasional rankings as the most important problems, replacing them with taxes. The last time taxes were ranked as the most important problem was in December 2020.  

“California was already the highest taxed state in the nation, so the findings in the latest Optimism Index are not so much a surprise as they are a reminder of our crying need for better policies,” said John Kabateck, state director for the National Federation of Independent Business in California. “One such better policy would have been to pay off our $20 billion debt to the federal government over our unemployment insurance loans when Uncle Sam was ladling out gobs of cash a few years ago. Too late now, which means small business owners are on the hook for the increased costs associated with the unemployment insurance taxes, which only businesses pay, for many more years to come. And to think some lawmakers still want to award striking workers who already have jobs with unemployment benefits. More than most examples, this shows the mentality of the policymakers in charge of making decisions for California.”

The National Federation of Independent Business’s Index is the gold standard measurement of America’s small business economy. Used by the Federal Reserve, congressional leaders, administration officials and state legislatures across the nation, it’s regarded as the bellwether on the health and welfare of the Main Street.

The Optimism Index, aka Small Business Economic Trends report, is a national snapshot of National Federation of Independent Business-member, small-business owners not broken down by state. The typical National Federation of Independent Business member employs between one and nine people and reports gross sales of about $500,000 a year.  

“Although optimism recovered slightly in May, uncertainty is still high among small business owners,” National Federation of Independent Business Chief Economist Bill Dunkelberg said. “While the economy will continue to stumble along until the major sources of uncertainty are resolved, owners reported more positive expectations on business conditions and sales growth.”

Highlights from the June 10 Optimism Index included a net one percent, seasonally adjusted, of owners who viewed current inventory stocks as “too low” in May, up seven points from April and the highest reading since August 2022. This was the largest monthly increase in the survey’s history.

The net percentage of owners expecting better business conditions rose 10 points from April to a net 25%, seasonally adjusted.

The net percentage of owners expecting higher real sales volumes rose 11 points from April to a net 10%, seasonally adjusted. This component contributed the most to the Optimism Index’s improvement.

The percentage of small business owners reporting labor quality as the single most important problem for business fell three points from April to 16%.

Keep up with the latest California small-business news at www.nfib.com, on X at NFIB_CA and on Facebook at NFIB.CA.