Small business optimism dipped below its 52-year average for the first time in a year in March, driven by the Iran war and the subsequent surge in oil prices, the National Federation of Independent Business (NFIB) said Tuesday (April 14).
The NFIB Small Business Optimism Index fell 3.0 points in March to 95.8. That dropped the Index below the historical average of 98.0 for the first time since April 2025, the group said in a Tuesday press release.
The negative impact of oil prices upon small business confidence more than outweighed the positive effect of the 20% Small Business Deduction and other small business tax provisions in the Working Families Tax Cut Act, NFIB Chief Economist Bill Dunkelberg said in the release.
Dunkelberg said that “the dramatic spike in oil prices has spooked consumers and owners alike. Small business owners are having to absorb those higher input costs and pass them along to their customers.”
The greatest contributors to the decline in optimism were an 11-point drop in the frequency of reports of positive profit trends and a 7-point decline in the net percent of owners expecting better business conditions, according to the release.
The last time small business optimism dropped below its historical average, in April 2025, NFIB attributed the decline to the implementation of new policy priorities, heightened uncertainty, and concern about taxes reaching a 3.5-year high.
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In Tuesday’s press release, NFIB said its Uncertainty Index remained well above the historical average of 68, having risen 4 points and reached 92.
In the report, the NFIB Research Center said the consequences of the Iran war have affected the optimism of both small business owners and consumers.
“A resolution of the conflict will eliminate supply chain problems, lower the price of oil, and all other related products,” the organization said in the report. “In the meantime, uncertainty reigns.”
It was reported March 25 that retailers were cautioning that a lengthy war in Iran could mean higher prices in stores. Retailers pointed to the added costs of fuel and freight, interrupted supply lines and weakened demand among consumers facing a higher cost of living.
On April 6, the Institute for Supply Management’s Services PMI Index showed that the measure of prices paid for services and materials rose to the highest level since October 2022. ISM noted in its report that while businesses are noting a relaxation on tariffs, the war in Iran has driven up energy prices.
