Small business optimism increased in December, according to the latest National Federation of Independent Business (NFIB) Small Business Optimism Index. The index rose by 0.5 points to reach 99.5, remaining above its 52-year average of 98. This improvement was mainly driven by more owners expecting better business conditions, while the Uncertainty Index dropped by seven points to its lowest level since June 2024.
“2025 ended with a further increase in small business optimism,” said NFIB Chief Economist Bill Dunkelberg. “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.”
Despite these gains at the national level, New Mexico’s small businesses continue to face challenges. “While optimism is improving, New Mexico’s small business owners are still contending with a difficult business environment here in our state,” said NFIB State Director Jason Espinoza. “Although many costly mandates and regulations were defeated at the Roundhouse last session, there’s no question they will be reconsidered next week when the Legislature gavels into session. Main Street New Mexicans are asking state lawmakers to resist policy proposals that would make it more difficult to own and operate a small business, and instead advance reforms that promote greater transparency, reduce unnecessary costs, and ensure small businesses get a seat at the table when crafting policy.”
The survey found that taxes have become a growing concern for small businesses nationwide. In December, 20% of owners cited taxes as their top problem—an increase of six percentage points from November—making it the most frequently mentioned issue since May 2021.
Price trends showed some relief: both actual and planned price increases fell compared to November figures. The share of owners raising average selling prices dropped four points to a net 30%, though this remains well above historical averages.
Interest rates also eased somewhat for borrowers; only a net negative three percent reported paying higher rates on their most recent loan—the lowest figure since January 2021.
Labor market challenges persist: one-third of small businesses had job openings they could not fill in December—unchanged from November—and most hiring firms continued struggling with finding qualified applicants.
Capital investment activity picked up slightly; over half of surveyed owners made capital outlays during the past six months—a four-point rise from November—with notable spending on equipment and vehicles.
Sales performance remained below long-term norms despite slight improvement; actual sales over the prior three months were still lower than historic averages.
Supply chain disruptions affected nearly two-thirds of respondents but shifted toward milder impacts rather than severe ones.
On compensation trends, more firms reported increasing pay for employees compared with previous months. However, expectations for higher real sales volumes declined heading into early 2026.
Other findings include:
– Nine percent rated their business health as excellent.
– A net five percent found obtaining loans harder than before.
– Thirteen percent saw current conditions as favorable for expansion.
– Twelve percent identified inflation as their biggest challenge.
– Fewer cited government regulation or red tape as their main issue compared with earlier surveys.
The NFIB has tracked these trends through regular surveys since the late 1970s and releases updated reports monthly based on data collected from randomly selected members across its network.
