Oil Price Spike Erodes Small Business Confidence, NFIB Says

• The decline was led by an 11-point drop in positive profit trends and a 7-point decrease in owners expecting better business conditions
• NFIB's Uncertainty Index rose 4 points to 92, remaining well above its historical average of 68
• Small business owners are absorbing higher input costs from oil price spikes and passing them to customers, while supply chain disruptions continue

Summary: Oil Price Spike Erodes Small Business Confidence

The National Federation of Independent Business (NFIB) reported that small business optimism fell below its 52-year historical average for the first time in a year during March 2026, primarily due to surging oil prices linked to the Iran war.

Key Data Points:

• The NFIB Optimism Index dropped 3.0 points to 95.8 in March, falling below the historical average of 98.0
• Reports of positive profit trends declined 11 points
• Net percent of owners expecting better business conditions fell 7 points
• The Uncertainty Index rose 4 points to 92, well above its historical average of 68

Market Impact:

NFIB Chief Economist Bill Dunkelberg noted the oil price spike has "spooked consumers and owners alike," forcing small businesses to absorb higher input costs and pass them to customers. These negative effects outweighed positive impacts from the 20% Small Business Deduction and other tax provisions in the Working Families Tax Cut Act.

The Iran war has disrupted supply chains, increased costs for fuel and freight, and weakened consumer demand amid higher living costs. Retailers warned in late March that a prolonged conflict could drive store prices higher.

Supporting data from the ISM Services PMI Index (April 6) showed prices paid for services and materials reached their highest level since October 2022, with the war driving up costs despite some tariff relaxation.

The NFIB stated that resolving the conflict would eliminate supply chain problems and reduce oil and related product prices, but "in the meantime, uncertainty reigns."