Kristina Roberts
In May, small business owners in the United States began to feel a bit more hopeful about the future. After several months of worrying news and low confidence, there was a slight improvement in how they viewed their business prospects. This change was partly due to some easing of trade problems between the US and China, which gave businesses a small reason to feel better. However, even though the mood improved a little, many business owners are still feeling nervous. They are unsure about what lies ahead, especially with some important government decisions still hanging in the air.
According to a group called the National Federation of Independent Business, which tracks how small businesses are feeling, their special index showed a rise. In May, the Small Business Optimism Index moved up by three points and reached 98.8. This was the first time it went up since December. It was a welcome change after months of slowdowns and doubts. But even as things looked better on the surface, the index that measures how uncertain small business owners are also went up by two points. It reached 94, which shows that many are still worried.
The reason for the better mood might be linked to changes in tariffs. The US and China had been in a long and tense fight over trade, which had hurt businesses. But recently, the US government decided to lower the tariffs on goods coming from China. These tariffs, which are like extra taxes on imported items, dropped from 145% to 30%. This change will last until early August. For many business owners, this move was seen as a sign that sales might go up because items would become cheaper and easier to buy. That’s why they felt a little more hopeful.
Still, not everyone is breathing easy. The big concern now is about something called the “big beautiful bill” – a major tax plan pushed by President Donald Trump. The bill made it through the House of Representatives, but it is now facing strong resistance in the Senate, especially from members of Trump’s own party. Some Republicans are worried that passing the bill could make the country’s debt even larger. Because of this fight, many business owners don’t know what will happen next, and that’s causing them a lot of stress.
Bill Dunkelberg, the chief economist at the National Federation of Independent Business, explained it clearly. “Congress hasn’t passed the big beautiful bill yet, and Trump is still messing with tariffs, the uncertainty level is rising,” he said. He also added, “While tariffs might be a bumpy road while countries negotiate trade deals, Congress can do their part by passing the BBB sooner rather than later to take that piece of uncertainty off the table.”
This tax bill isn’t just causing problems in Congress. It has also sparked a disagreement between President Trump and tech billionaire Elon Musk. This political clash has made things even messier, especially for those running small businesses who just want some stability and clear rules.
Another reason why small business confidence rose was that more owners now believe they will sell more goods in the coming months. The number of people who expect higher sales, after adjusting for inflation, went up sharply. It rose by 11 points to 10%. This shift helped lift the overall confidence index. More people are also thinking that business conditions will get better. However, at the same time, many are also complaining about taxes. A growing number of small business owners said that taxes were their biggest problem right now.
Some business owners are also facing a shortage of goods. More of them said that their current inventory levels – the amount of goods they have to sell – were too low. This was the highest this number had been since August 2022. On top of that, they are finding it harder to get materials and supplies for their shops or factories. Delivery times are getting longer, and this could mean that prices might go up soon because of the shortages.
The survey also painted a picture of a job market that’s cooling off. In recent years, many small businesses struggled to find good workers. They often said that finding skilled and reliable employees was their number one problem. But now, fewer people are saying that labor quality is the biggest issue. This number has dropped to levels last seen during the early part of the pandemic in 2020. This change shows that maybe hiring isn’t as hard as before, but it could also mean that there’s a slowdown in job growth.
Even the number of small businesses that are increasing pay for their workers has gone down. The share of businesses raising wages is now at its lowest level since early 2021. This might be because of the same uncertainty that’s making owners careful about everything – from investing in their business to hiring new workers.
Dunkelberg summed it up by saying, “Overall, the economy will continue to stumble along until the major sources of uncertainty are resolved. It’s hard to steer a ship in the fog.” This quote paints a strong picture of what small businesses are dealing with. They are trying their best to move forward, but it’s difficult when the path ahead is not clear.
While the slight rise in confidence is a good sign, it doesn’t mean that all is well. Business owners are still facing a lot of challenges. They are waiting for clear decisions from the government. They are hoping that trade stays smooth and that the tax laws become more predictable. Until then, many of them will continue to worry and prepare for both good and bad possibilities.
In the end, small business owners are used to facing ups and downs. They are strong and determined, but they also need support and clear direction from leaders. With so many changes happening – from trade issues to tax plans – it’s no surprise that they feel both a little hopeful and very uncertain at the same time. What comes next will depend a lot on the choices made in Washington, and small businesses will be watching closely, hoping for the best.
