Luis Alvarez
The Small Business Optimism Index fell for the third month in a row, dropping -3.3 pts to 97.4 in March, below expectations of a smaller decline to 98.9. The rise since the election, driven by a sudden improvement in soft data in
March NFIB Small Business Optimism: Small-Cap Outlook Is Bleak
Summary
- The Small Business Optimism Index fell to 97.4 in March, driven by protectionist policies and reciprocal tariffs, signaling bleak fundamentals for small firms.
- The General Business Conditions Outlook index dropped 16 points in March, aligning with negative actual sales and earnings, indicating a deteriorating business environment.
- Employment and compensation costs are rising, with small businesses facing margin compression due to increased labor and input costs from tariffs.
- The Russell 2000 ETF has declined 19.45% in 2025, with valuations dropping; small caps are rated as a Sell due to tariff impacts and recession risks.
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