A monthly measure of optimism among small business owners remains at its lowest level in two years on less upbeat expectations for earnings, inventories and hiring.
The National Federation of Independent Business reported that its Small Business Optimism Index fell three-tenths of a point to 92.6 in March to retreat farther below its historical average of 98.
“Small business owners remain extremely pessimistic about the economy and rightfully so. Cost-increasing regulations seem to multiply overnight, and there is no clear end in sight,” said Bill Dunkelberg, chief economist for the NFIB.
Since December 2014, the Small Business Index has dropped 7.4 points. Dunkelberg said the declining index constitutes a warning another recession could occur. Depending on what happens, that warning could become an alarm, he said.
Attempts to redistribute income through taxes and regulations over past decades have created what Dunkelberg called a “mess.”
The NFIB bases the index on the results of monthly surveys of members of the small business advocacy group, most of them small business owners. For March, six of 10 components of the index retreated.
The proportion of small business owners responding to the survey upon which the March index was based who expect the economy to improve increased four points. But at a net negative 17 percent, more owners still anticipate worsening than improving conditions.
The share of owners planning to increase capital outlays over the next three to six months rose two points to 25 percent. But only 6 percent of owners said they consider now a good time to expand, down two points.
A net 9 percent of owners said they plan to increase staffing, down a point. Meanwhile, 25 percent of owners reported hard-to-fill job openings, down three points.
The proportion of owners who expect higher sales rose a point to a net 1 percent.
The share of owners planning to increase inventories fell a point to a net negative 2 percent. The proportion of owners who consider current inventories too low fell three points to a net negative 5 percent.
The share of owners reporting higher earnings fell a point. At a net negative 22 percent, more owners reported profits were lower quarter to quarter than higher.
Asked to identify their most pressing business problems, owners most frequently cited taxes, followed close behind by government regulations and red tape and then poor sales.