The National Federation of Independent Business (NFIB) released its latest Small Business Optimism Index, which showed a 0.5-point increase in December to 99.5, remaining above the index’s 52-year average of 98. The improvement was mainly attributed to more business owners expecting better conditions, while the Uncertainty Index dropped by seven points from November to 84, reaching its lowest level since June 2024.
John Kabateck, state director for NFIB in California, commented on the report: “Nice to see small business owners across the nation registering a slightly improved outlook even though it’s doubtful that sentiment is shared by many Main Street entrepreneurs here. For instance, the day before the release NFIB’s latest Optimism Index, the U.S. Department of Labor announced in the Federal Register that California has had outstanding advances on its unemployment insurance loans for five consecutive years and as a result, employers here will be paying more in UI taxes this year. To cope with the pandemic-caused strain on their unemployment trust funds, 22 states needed to borrow from the federal government in order to keep their UI trust funds solvent and unemployment benefits going to those in need of them. All but one state, guess which one, has paid Uncle Sam back. Only a territory, the U.S. Virgin Islands, has a worse record. Wow. What economic company.”
NFIB Chief Economist Bill Dunkelberg added: “2025 ended with a further increase in small business optimism. While Main Street business owners remain concerned about taxes, they anticipate favorable economic conditions in 2026 due to waning cost pressures, easing labor challenges, and an increase in capital investments.”
Key findings from December include a nine-point rise among owners expecting better business conditions—now at a net 24% (seasonally adjusted)—marking the first such increase since July. Regarding overall business health assessments: 9% rated their situation as excellent (down two points), 54% as good (up one point), 34% as fair (up four points), and 3% as poor (down two points). Taxes were identified as the most significant problem by 20% of respondents—a six-point jump from November—making it the top concern and reaching its highest level since May 2021.
Alongside this data release, NFIB launched a new episode of its “Small Business by the Numbers” podcast featuring Holly Wade and Peter Hansen discussing current trends affecting small businesses nationwide.
NFIB’s monthly Small Business Optimism Index is widely recognized as an important measure of America’s small business economy and is referenced by policymakers including the Federal Reserve and Congressional leaders.
The National Federation of Independent Business – California represents more than 35,000 small business owners statewide and engages actively in legislative advocacy on their behalf (source). The organization provides resources and tools designed to support growth while protecting businesses from excessive regulations (source). It continues efforts to enhance opportunities for small enterprises through policy advancement (source).
For additional updates on California small-business news or legislative activity relevant to local entrepreneurs, visit www.nfib.com or follow @NFIB_CA on X or @NFIB.CA on Facebook.
The NFIB has advocated for independent businesses for over eight decades at both state and national levels as a nonprofit association dedicated exclusively to representing small enterprises.
