High-Frequency Data Signals Further Decline In Small Business Optimism

After US small-business optimism saw its largest surge in nearly half a century following Trump’s late 2024 victory, the index peaked then slid in January amid rising macroeconomic uncertainty. With mounting trade tensions and consumer concerns, optimism among mom-and-pop shops may decline further. 

Goldman’s Will Nance, Rajul Bothra, and others cited new data from the Fiserv Small Business Index, a monthly indicator measuring small business performance across the US at national, state, and industry levels. Unlike traditional surveys, the index aggregates point-of-sale transaction data—including card, cash, and check transactions—from 2 million small businesses, offering some of the most real-time insights into consumer spending trends. 

Fiserv’s updated Small Business Index for February showed a further slowdown in consumer spending growth compared to January. NSA spending growth was just .2% (vs. 6.2% in January), while SA growth came in at 2.1% (vs. 4.9% prior). Adjusting for the leap year headwinds, NSA growth was a more modest 3.2%, while SA growth remained stable at 5.1%. Transaction growth also slowed to 1.2% NSA. Restaurants continued to show weakness. 

Here’s more color from the analysts:

Bottom Line:

Fiserv recently updated the Fiserv Small Business Index for the month of February. Spending growth saw a step down compared to January with 0.2% growth NSA (vs 6.2% growth in January) and 2.1% SA growth (vs 4.9% January). Adjusting for leap year headwinds, the step down was more modest at 3.2% NSA growth and stable when looking at 5.1% SA growth compared to the prior month. Transaction growth stepped down to 1.2% growth NSA. In terms of notable subsector trends, Restaurants continued to see weakness in spending and Retail sales saw a step down from January (adjusted for leap year). FI flagged that February is the first month since January 2023 in which retail average ticket sizes have increased year over year. This trend could point to either increasing prices on regularly purchased goods or the mix in goods purchased. In addition, FI noted service-oriented spending saw a modest decline, including Professional Services and Accommodation (Hotel spending) driven in part by cyclical performance. Overall, we see believe February looks stable on a seasonally adjusted basis, while the decline in NSA growth could be a negative for near term spending updates

February Results:

For the month of February, the Fiserv Small Business Index saw mixed trends in consumer spending with total SMB sales +0.2% yoy (3.2% adjusted for leap year, up +5.1% on a SA basis adjusted for leap year) vs 6.2% yoy in January. At the sector level, SMB retail sales remained relatively resilient but stepped down from January levels (2.2% in February adjusted for leap year vs 4.5% in January). Restaurant Spending (Food Services and Drinking Places) continued to see weakness in February at -4.8% (adj for leap year) vs to -1.8% in January.

From late 2024 into late February, bars, restaurants, arts, entertainment, and recreation small businesses recorded a noticeable spending slowdown. This trend suggests that despite a boost in small-business optimism following Trump’s victory, consumers have abruptly cut back on discretionary spending—because the inflation storm triggered by Biden-Harris has not yet subsided. 

Fiserv’s mixed consumer data comes ahead of the next NFIB Small Business Optimism Index release, scheduled for next Tuesday. This may reflect ongoing uncertainty weighing on sentiment.

A tariff-driven selloff on Wall Street and a “Bidenomics” hangover appear to be what the Trump administration needs to slow inflation while simultaneously bringing borrowing costs down to cushion the landing. 

BESSENT: WE’RE SET ON BRINGING INTEREST RATES DOWN-FOX NEWS INTERVIEW https://t.co/myf6n3tgMX

— zerohedge (@zerohedge) March 4, 2025

Maybe…

If you didn’t already understand the current White House’s approach from their budget, Bessent is telling you loud & clear, if you care to listen.

This is what he is saying in plain English:

– They want to slow demand in the real economy & hence slow inflation, by… https://t.co/6GKUIekITj

— Cem Karsan (@jam_croissant) March 3, 2025

. . .