Small business confidence saw a sharp decline in March, according to the latest release of the NFIB Small Business Optimism Index. The index dropped 3.3 points to 97.4, falling below its 51-year average of 98. This marks the third consecutive monthly decline and the steepest one-month drop since December 2020.

The report reflects growing unease among business owners nationwide, including those in Mid Valley communities such as El Monte, South El Monte, and Baldwin Park. Local business operators are watching closely as economic pressures mount.

Taxes and Future Outlook Raise Concern

According to the NFIB, 18% of small business owners cited taxes as their single most important problem — a two-point increase from February. This growing concern suggests that owners are feeling the weight of tax-related uncertainty, particularly as the filing season concludes and policymakers debate potential changes.

Business owners are also less confident about what lies ahead. The number of respondents who expect better business conditions in the next six months dropped significantly — by 16 points — representing the largest dip in optimism in over three years.

Price Pressures and Tariff Impact Loom

While fewer business owners reported raising prices in March, a larger share said they plan to do so in the near future. The percentage of those planning future price hikes reached its highest level since March 2024. This could signal that cost pressures are continuing to affect operations, even as consumer demand shows signs of moderation.

Notably, the survey data was collected before the Trump administration announced a new round of global tariffs on April 2. Analysts suggest that the added uncertainty from the trade measures may further dampen small business sentiment in the coming months.

Implications for the Mid Valley Economy

In local communities like Rosemead and Irwindale, where small and family-run businesses make up a significant portion of the commercial landscape, continued declines in optimism could impact hiring, investment, and pricing decisions. With inflation concerns, tax burdens, and regulatory changes top of mind, many owners may be more cautious in expanding or hiring through mid-2025.

As the economic landscape continues to shift, Mid Valley business owners will likely look for clarity on tax policy, inflation control, and trade impacts to help regain confidence heading into the summer.