April 14, 2026
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Small business optimism declined 3.0 points in March to 95.8 after falling 0.5 point in February. The index level is somewhat below its 40-year average rate of 98.0 which is regarded as the breakeven point for this series.
NFIB Chief Economist William Dunkelberg said, “The 20% Small Business Deduction and other supportive small business tax provisions in the Working Families Tax Cut Act have had many positives for small business owners. However, the dramatic spike in oil prices has spooked consumers and owners alike. Small business owners are having to absorb those higher input costs and pass them along to their customers.”
We expect 2.0% GDP growth in the first quarter and 2.5% growth in 2026. The economy still seems to be growing at a respectable pace.
The core personal consumption expenditures deflator rose 3.0% in 2025. We expect it to increase 3.3% in 2026. This is the inflation measure that the Fed targets at 2.0%.
The funds rate currently is 3.7%. The Fed believes the so-called “neutral” funds rate is about 3.0%. But with the inflation rate accelerating somewhat in 2026 there is no room for further rate cuts this year which will create a dilemma for incoming Fed Chair Kevin Warsh.
Stephen Slifer
NumberNomics
Charleston, SC
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