DES MOINES, IOWA (January 16, 2026) – The NFIB Small Business Optimism Index rose 0.5 points in December to 99.5 and remained above its 52-year average of 98. Of the 10 Optimism Index components, two increased, three decreased, and five were unchanged. An increase in those expecting better business conditions primarily drove the rise in the Optimism Index. The Uncertainty Index fell seven points from November to 84, the lowest reading since June 2024.
“2025 ended with a further increase in small-business optimism,” said NFIB Chief Economist Bill Dunkelberg.
“While Main Street business-owners remain concerned about taxes, they anticipate favorable economic conditions in 2026 due to waning cost-pressures, easing labor challenges, and an increase in capital investments.”
"Taxes, specifically property taxes, are the most important problem for a majority of Iowa small-business-owners,” said NFIB Iowa State Director Logan Shine.
“Iowa's job creators need to see significant relief from tax burdens and regulations in 2026. Local and state lawmakers must prioritize these issues to give Iowa’s economy a chance to thrive.”
In conjunction with the December report, NFIB also released a new episode of the “Small Business by the Numbers” podcast. This is the NFIB Research Center’s new podcast, where co-hosts Holly Wade, the Executive Director of the NFIB Research Center, and Peter Hansen, Director of Research and Policy Analysis, discuss the data, stories, and economic conditions affecting small businesses nationwide. Listen to the latest episode here.
Key findings include:
- Twenty percent of small-business-owners reported taxes as their single most important problem, up six points from November and ranking as the top problem. This is the highest reading since May 2021.
- In December, both actual and planned prices fell from the previous month. The net percent of owners raising average selling prices fell four points from November to a net 30% (seasonally adjusted). A net 28% (seasonally adjusted) plan to increase prices in the next three months (down 2 points).
- A net negative 3% of owners reported paying a higher interest rate on their most recent loan, down five points from November and the lowest reading since January 2021.
- The net percent of owners expecting better business conditions rose nine points from November to a net 24% (seasonally adjusted), contributing the most to the rise in the Optimism Index. This was the first increase since July.
- When asked to evaluate the overall health of their business, 9% rated it excellent (down 2 points), 54% rated it good (up 1 point), 34% rated it fair (up 4 points), and 3% rated it poor (down 2 points).
- The net percent of owners reporting inventory gains rose 6 points to a net negative 1% (seasonally adjusted), the highest reading of the year.
- In December, 64% of small-business-owners reported that supply-chain disruptions were affecting their business to some degree, unchanged from November. Beneath simple yes/no impact binary, there was a positive shift from those reporting a significant impact to those reporting a moderate or mild impact.
As reported in NFIB’s monthly jobs report, a seasonally-adjusted 33% of all small-business-owners reported job openings they could not fill in December, unchanged from November. Unfilled job openings remain above the historical average of 24%. Of the 53% of owners hiring or trying to hire in December, 91% reported few or no qualified applicants for the positions they were trying to fill. A seasonally-adjusted net 17% of owners plan to create new jobs in the next three months, down two points from November.
Fifty-six percent of small business owners reported capital outlays in the last six months, up four points from November. Of those making expenditures, 37% reported spending on new equipment (unchanged), 27% acquired vehicles (up eight points), and 19% improved or expanded facilities (up five points). Thirteen percent spent money on new fixtures and furniture (up three points), and 7% acquired new buildings or land for expansion (up two points). Nineteen percent (seasonally adjusted) plan capital outlays in the next six months, down one point from November. Historically, this is a weak reading.
A net negative 8% of all owners (seasonally adjusted) reported higher nominal sales in the past three months, up one point from November. Actual sales remain below the historical average of a net 0%. The net percent of owners expecting higher real sales volumes over the next quarter fell 5 points from November to a net 10% (seasonally adjusted).
The net percent of owners reporting inventory gains rose six points to a net negative 1% (seasonally adjusted), the highest reading of the year. Not seasonally adjusted, 13% reported increases in stocks (up one point), and 15% reported reductions (down three points). A net negative 1% (seasonally adjusted) of owners viewed current inventory stocks as “too low” in December, unchanged from November. A net negative 1% (seasonally adjusted) of owners plan inventory investment in the coming months, unchanged from November.
In December, 64% of small-business-owners reported that supply-chain disruptions were affecting their business to some degree, unchanged from November. Three percent reported a significant impact (down four points), 21% reported a moderate impact (up two points), 40% reported a mild impact (up two points), and 35% reported no impact (unchanged).
In December, both actual and planned prices fell from the previous month. The net percent of owners raising average selling prices fell four points from November to a net 30% (seasonally adjusted). Price increases remain well above the historical average of a net 13%, suggesting continued inflationary pressure. In addition, November recorded a substantial increase in this net percent, so despite the December decline, the level is well above the typical level for the last two years. Unadjusted, 34% reported higher average prices (down five points), and 8% reported lower average selling prices (unchanged). Looking forward to the next three months, a net 28% (seasonally adjusted) plan to increase prices, down two points from November.
Twelve percent of owners reported that inflation was their single most important problem in operating their business (higher input costs), down three points from November.
Seasonally adjusted, a net 31% reported raising compensation, up five points from November. A seasonally-adjusted net 24% plan to raise compensation in the next three months, unchanged from November. The frequency of reports of positive profit trends rose three points from November to a net negative 20% (seasonally adjusted).
Among owners reporting lower profits, 41% blamed weaker sales, 13% cited the rise in the cost of materials, and 12% cited usual seasonal change. Nine percent reported price change for their product(s) or service(s), and 7% cited labor costs. Among owners reporting higher profits, 64% cited sales volume, 14% cited usual seasonal change, and 3% cited higher selling prices.
A net 5% reported their last loan was harder to get than in previous attempts, down one point from November. In December, a net negative 3% of owners reported paying a higher interest rate on their most recent loan, down five points from November and the lowest reading since January 2021. The average rate paid on short maturity loans was 8.4% in December, up 0.5 points from November’s lowest level since May 2023. Twenty-five percent of all owners reported borrowing regularly, up two points from November but still at a historically low level.
When asked to evaluate the overall health of their business, 9% rated it as excellent (down two points), 54% rated it as good (up one point), 34% rated it fair (up four points), and 3% rated it poor (down two points). The net percent of owners expecting better business conditions rose nine points from November to a net 24% (seasonally adjusted), contributing the most to the rise in the Optimism Index. This was the first increase since July.
In December, 13% (seasonally adjusted) reported that it is a good time to expand their business, unchanged for the second consecutive month. Compared to readings during economic expansions, this is not a strong reading.
In December, 20% of small-business-owners reported taxes as their single most important problem, up six points from November and ranking as the top problem. This is the highest reading since May 2021. The percent of small-business-owners reporting labor quality as the single most important problem for their business fell two points from November to 19%. Labor costs reported as the single most important problem for business rose one point to 9%.
Twelve percent of owners reported that inflation was their single most important problem in operating their business, down three points from November. The percent of small-business-owners reporting government regulations and red tape as their single most important problem fell three points to 7%. The percent of small business owners reporting poor sales as their top business problem rose one point to 10%.
In December, 9% reported the cost or availability of insurance as their single most important problem, down one point from November. Three percent reported that financing and interest rates were their top business problem in December, unchanged from November. Six percent reported competition from large businesses as their single most important problem, up 3 points from November.
The NFIB Research Center has collected Small Business Economic Trends data with quarterly surveys since the fourth quarter of 1973 and monthly surveys since 1986. Survey respondents are randomly drawn from NFIB’s membership. The report is released on the second Tuesday of each month. This survey was conducted in December 2025.
For over eighty years, NFIB has been advocating on behalf of America’s small and independent business-owners, both in Washington DC and in all fifty state capitals. NFIB is non-profit, non-partisan, and member-driven. Since our founding in 1943, NFIB has been exclusively dedicated to small and independent businesses, and remains so today. For more information, please visit nfib.com.
