Each month, NFIB surveys a random sample of its small-business membership to better understand economic trends and the current state of Main Street. January’s Small Business Economic Trends report found that 14% of all small business owners characterized the health of their business as “excellent” (Table 1, 959 firms). When looking specifically at census regions, reports of business health as “excellent” were highest in the Mountain states (21%) and lowest in the West North Central states (8%).  The WNC states also had the lowest percent of owners viewing the current period as a good time to expand. Firms in the East North Central and West North Central states reported excellent business health the least frequently. Twenty-one percent of firms in the Mountain states reported excellent business health, the highest across all regions. New England ranked second at 19% and had the highest percent of business owners viewing the current period as a good time to expand their business (19%). Looking ahead to the next six months, New England owners most frequently reported expecting business conditions to be “much better” (11%), followed by owners in the South Atlantic states (10%).

By industry, reports of “excellent” business health were the highest in transportation (29%) and professional services (25%) (Table 2). These two industry groups also led the parade of optimists, with 17% and 13% expecting much better business conditions in the next six months. Looking at growth, 34% of firms in the professional services industry felt it was a good time to expand, in line with the BLS reporting that healthcare has experienced rapid growth.

The health of the firm (reported by the owner) is correlated with expectations about future business conditions (Table 3). A third (33%) of the owners who view their firm’s health as “poor” expect business conditions in the next six months to worsen, compared to 6% for owners who view their firm’s health as “excellent.”

The economy is still expanding, but at a very slow pace (0.7% GDP growth in Q4). Growth is being created by massive investments in AI-related activities (data centers, power generators, etc.), but not by consumer spending. Debt levels are elevated, and higher oil prices are pushing inflation higher. Uncertainty remains well above average, and resolving some of the major causes of that uncertainty will be conducive to growth.