U.S. Small-Business Confidence Holds Near Long-Term Average as Tax Concerns Rise

U.S. small-business confidence was little changed in October, according to the National Federation of Independent Business, with the group’s closely watched optimism index slipping 0.1 point to 97.8 and staying close to its long-term norm.

The reading left the NFIB Small Business Optimism Index just below its 53-year average of 98.0, a result that suggested Main Street sentiment remained steady even as owners continued to face cost pressures, hiring difficulties and uncertainty about policy and operating conditions.

What changed more sharply inside the survey was the ranking of owners’ biggest problems. Taxes jumped to the second-most cited concern, while labor quality or availability remained the top issue. At the same time, the survey showed some improvement in owners’ views of their own businesses, a pickup in expectations for better conditions and a drop in uncertainty from the prior month.

Taxes jumped while labor stayed the top concern

In its October Small Business Economic Trends release, NFIB said 21% of small-business owners named taxes as their single most important problem. That was up 10 points from September and the highest share since May 2021. Even with that increase, labor quality or availability remained the most frequently cited problem at 25%, though that measure eased by one point from September.

The shift matters because it changes the mix of pressures showing up in the monthly survey. In September, taxes were far less prominent, with 11% of owners citing them as their top problem. Inflation, not taxes, had ranked second that month at 20%. October’s results therefore pointed to a meaningful reordering of concerns rather than a simple continuation of the previous month’s pattern.

NFIB Chief Economist Bill Dunkelberg said there was little overall change in optimism in October, but he also noted a few encouraging developments. More owners rated their business health as good or excellent, and actual sales improved. That combination helps explain why the headline optimism index stayed near its long-run average even though several operating problems remained elevated.

Owners’ self-assessments improved noticeably from September. Fifteen percent rated their business as excellent, up two points, and 54% said conditions were good, up six points. The share rating business conditions as fair fell nine points to 26%, while 4% said conditions were poor, unchanged from the prior month. That was a reversal from September, when the survey had shown a weaker self-assessment profile with more owners describing their businesses as only fair.

Price and borrowing pressures remained in the background

The October report also showed that inflation-related pressure had not disappeared. A seasonally adjusted net 33% of owners said they had raised average selling prices, up two points from September. Another net 37% said they planned to increase prices, up six points and the highest reading since July 2022.

Those pricing intentions fit with the broader tone of the report. Optimism was steady, but not because cost strains had faded. Rather, the survey suggested that owners were balancing stronger demand and healthier business conditions against still-elevated price pressure, labor shortages and rising financing costs.

Borrowing conditions also looked somewhat tougher. A net 13% of owners reported paying a higher interest rate on their most recent loan, up five points from September. NFIB said that was the highest reading since August 2024. For smaller firms that rely on credit to fund inventory, equipment purchases or working capital, that kind of movement can weigh on expansion plans even when customer demand is holding up.

Inventory readings were softer. The share of owners saying inventories were too low fell three points to a net negative 3%, and planned inventory investment also slipped three points to a net negative 1%. Those numbers did not dominate the headline, but they suggested some caution about how aggressively owners wanted to build stock levels heading into the next few months.

Hiring stayed active, but the labor market remained difficult

Labor indicators continued to describe a small-business job market with persistent frictions. A seasonally adjusted 36% of owners reported job openings they could not fill in the current period, up four points from September and 12 points above the historical average, NFIB said. Hiring activity also rose, with 56% of owners reporting that they were hiring or trying to hire in October, up five points from the prior month.

Finding qualified applicants remained the central challenge. Among owners who were hiring or trying to hire, 86% said they found few or no qualified applicants for the positions they were trying to fill. That helps explain why labor quality or availability has stayed at or near the top of the problem list for several months even when other concerns, including inflation and taxes, move up and down.

Plans to add staff also stayed positive. Job-creation plans rose one point to 18% on a seasonally adjusted basis. Meanwhile, 11% of owners said it was a good time to expand, up four points from September. Expectations for better business conditions over the next six months also improved, rising two points to a net 8%. NFIB said that expectation reading remained above its historical average and was the strongest since August 2024.

The month-to-month comparison is important. In September, only 7% of owners said it was a good time to expand, and the survey was marked by worsening expectations and higher uncertainty. October’s report did not signal a broad surge in confidence, but it did show that some of September’s deterioration eased. The uncertainty index fell six points to 84, its lowest level since December 2025, after standing at 90 in September and 89 in August.

Taken together, the results painted a picture of an economy in which small firms were still operating under strain but were not retreating. Confidence remained near the long-term average, businesses reported healthier internal conditions than a month earlier, and expectations improved modestly. At the same time, taxes rose sharply as a stated concern, pricing plans stayed elevated, job openings were hard to fill and more owners reported paying higher borrowing costs.

NFIB’s research center said the survey was conducted in October and noted that the Small Business Economic Trends series has collected quarterly data since 1973 and monthly data since 1986. The report is released on the second Tuesday of each month, making it a regular snapshot of how owners view demand, costs, hiring and the policy environment across Main Street.