The National Federation of Independent Business (NFIB) has reported a rise in small business optimism in July, despite concerns about tariffs and inflation.
Small Business Optimism Rises, But Uncertainty Persists
The Small Business Optimism Index, as reported by the NFIB, increased by 1.7 points in July to reach 100.3, slightly surpassing the index’s long-term average of 98, The Hill reported. The rise was attributed to better business conditions and an increased belief in the potential for business expansion.
Despite the positive outlook, there is still a significant level of uncertainty, as indicated by an 8-point spike in the uncertainty index, which now stands at 97. Labor quality emerged as a primary concern, with 21% of small businesses identifying it as their most pressing issue, a 5-point increase from June.
When asked about the future, 16% of respondents expressed a desire to expand their businesses, marking a 5-point increase from the previous month. The NFIB’s chief economist, Bill Dunkelberg, noted that while optimism has increased, uncertainty remains high. He expressed hope that the next six months will bring more clarity, especially regarding the permanent 20% Small Business Deduction and the final form of trade policy.
AI Can Help Small Businesses Navigate Tariffs, Inflation
The rise in optimism comes despite concerns over tariffs and inflation. On Tuesday, billionaire investor Mark Cuban has previously warned of the heavy toll blanket tariffs can have on small businesses. He endorsed targeted tariffs for strategic industries while criticizing across-the-board trade measures.
As the uncertainty around tariffs exist, Shark Tank star, Kevin O’ Leary, says his 50-odd small businesses are using AI to combat inflation, lower operational cost and tackle margin pressure.
Furthermore, a potential shift in Wall Street’s focus towards the small-cap space has been observed. Factors such as low valuations, changes in tax laws, and turning technical trends are making small-cap stocks an attractive option.
iShares Russell 2000 ETF (NYSE:IWM) – has underperformed large-cap indices in 2025, but a turnaround could be on the horizon. On a year-to-date basis, IWM climbed 2.56%, as per Benzinga Pro.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
