Small business optimism slipped to 98.7 in August as the uncertainty gauge stayed 21 points above normal

by Tomas Ferreira · September 8, 2026

Markets Reporter, US Market Current

The first US data point of the shortened trading week arrived Tuesday morning, and it pointed sideways. The National Federation of Independent Business reported that its Small Business Optimism Index fell to 98.7 in August, down 1.1 points from July.

The trade group's summary put the figure in context: "The NFIB Small Business Optimism Index dipped in August to 98.7, just 1.1 points below July's highest level since August 2025, but remaining above the 52-year average of 98.0." That implies a July reading of 99.8, the survey's best in nearly a year, so August represents a partial give-back rather than a reversal.

The more striking number in the release is the one that did not move much. The NFIB Uncertainty Index fell two points to 89 — still 21 points above its historical average of 68. A reading that far above normal, sustained across months, is a different signal from a headline index hovering near its long-run mean. It suggests owners are not so much pessimistic as unable to plan.

The organization's own framing was blunt on that point: "Uncertainty remains elevated among small business owners as they face a mixed set of challenges with weakened sales, supply chain disruptions, and inflation pressures."

The composition of owners' complaints has shifted. Labor quality or availability remained the most-cited single most important problem at 23 percent of owners, but that was down four points from July — a meaningful one-month move in a series that usually grinds. Inflation and taxes tied for second place, each named by 16 percent of respondents.

The American Bankers Association, writing up the same release on Tuesday, characterized the survey as cooling while remaining above average, and its Office of the Chief Economist cited uncertainty surrounding inflation, tariffs, energy prices and geopolitical developments as weighing on business decisions.

That list maps closely onto what the Federal Reserve has been describing in its own documents. Minutes of the July 28-29 FOMC meeting state that inflation "remains elevated relative to the Committee's 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy." The minutes also record that "risks to the inflation forecast were seen as skewed to the upside, with the possibility that inflation would prove to be more persistent than the staff anticipated."

The macro backdrop against which the NFIB survey lands is a labor market that has re-accelerated. The Bureau of Labor Statistics reported Friday that nonfarm payrolls rose 162,000 in August with the unemployment rate unchanged at 4.1 percent, and revised June and July higher by a combined 55,000. Average hourly earnings rose 0.3 percent on the month to $37.75 and were up 3.1 percent over 12 months.

On inflation, the most recent published reading remains July's. The BLS reported on Aug. 12 that the all items CPI-U "increased 0.1 percent on a seasonally adjusted basis in July after falling 0.4 percent in June," and that "Over the last 12 months, the all items index increased 3.4 percent before seasonal adjustment." The core measure was tamer: "The index for all items less food and energy rose 0.2 percent after being unchanged in June," and 2.5 percent over the year.

The wedge between those two annual figures — 3.4 percent headline against 2.5 percent core — sits almost entirely in energy, which the BLS reported up 14.7 percent over 12 months despite falling 1.5 percent in July alone. Shelter, historically the dominant core contributor, rose just 0.1 percent on the month and 3.2 percent over the year. Food was up 0.1 percent monthly and 3.0 percent annually.

That decomposition is what makes the coming week consequential. If the energy channel is doing the work, the question for the Committee is whether it is bleeding into the core, and August is the first month that could show it clearly given the renewed run-up in crude.

The calendar is compressed. Per the BLS release schedule, Employer Costs for Employee Compensation for June arrives Wednesday at 10:00 a.m. Eastern, the August Producer Price Index at 8:30 a.m. Thursday, and the August Consumer Price Index plus Real Earnings at 8:30 a.m. Friday. Import and export price indexes for August follow on Sept. 16, the second day of the FOMC meeting.

The Committee will read all of it in silence. The Fed's blackout period began at 12:00 a.m. Eastern on Saturday, Sept. 5 and runs through 11:59 p.m. on Sept. 17, so no official will publicly interpret Friday's CPI before the Sept. 15-16 decision — a meeting the Fed's calendar lists as carrying a Summary of Economic Projections.

For the small firms the NFIB survey covers, the practical read is narrower than the policy debate. An uncertainty gauge stuck 21 points above its historical average, labor still the top-cited problem, and inflation and taxes tied behind it describes a set of firms operating without a settled view of their own input costs — which is, in a sense, the same problem the Committee has.