Small business optimism closed 2025 on a stronger note, offering cautious encouragement for entrepreneurs across the San Gabriel Valley who have spent much of the past year navigating high costs and economic uncertainty.
The latest Small Business Optimism Index from the National Federation of Independent Business showed sentiment rising for a second straight month in December. The index increased 0.5 points to 99.5, marking its highest level of the year and signaling improved confidence among small business owners nationwide.
Industry analysts attributed the gain largely to better expectations for business conditions and a notable decline in policy and economic uncertainty. The net share of owners who expect business conditions to improve jumped nine points to 24 percent. At the same time, the NFIB’s Uncertainty Index fell seven points, reaching its lowest level since June 2024.
Small Business Optimism And Local Conditions
For small business owners in El Monte, Baldwin Park, and surrounding cities, the shift reflects a modest but meaningful change in outlook after months of caution. Many local retailers, restaurants, and service providers have faced rising labor, supply, and borrowing costs since the pandemic.
The December report also showed fewer owners citing inflation as their single most important business problem. Twelve percent of respondents named inflation as their top concern, down three points from November. That decline mirrors broader data showing inflation pressures easing late in the year, even as prices remain elevated compared with pre-2021 levels.
Price pressures showed further signs of cooling. The net percentage of owners who raised prices in December fell four points from the prior month. Those planning to increase prices over the next three months declined by two points. For consumers in the San Gabriel Valley, slower price growth could help stabilize household budgets while supporting steady foot traffic for local businesses.
Small Business Optimism And Ongoing Challenges
Despite the improved mood, the report underscored ongoing challenges. Taxes emerged as the leading concern among small business owners. Twenty percent of respondents said taxes were their single most important problem, a six-point increase from November and the highest share since May 2021.
Tax burdens are a common issue for small businesses in California, where owners often face layered federal, state, and local requirements. Local chambers of commerce have long warned that rising compliance costs can strain smaller operators more than larger firms with dedicated accounting staff.
Labor availability and compensation also remained on owners’ radar, though they did not drive the December results as strongly as earlier in the year. Many employers continue to adjust wages and hours to attract and retain workers while managing thin margins.
The NFIB Small Business Optimism Index is based on a monthly survey of small business owners and is widely followed as an indicator of economic conditions at the grassroots level. More details on the index and survey methodology are available at https://www.nfib.com.
As 2026 begins, the latest reading suggests small business owners are entering the new year with steadier expectations. While concerns about taxes and long-term costs persist, rising optimism may support cautious investment and hiring across the San Gabriel Valley’s small business community.
