Small business economic trends point towards future employment weakness
The Sandbox Daily (4.8.2025)
Welcome, Sandbox friends.
Today’s Daily discusses:
small business economic trends
Let’s dig in.
Blake
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Quote of the day
“The best bargains are always found in frightening environments.”
- Howard Marks
Small business economic trends point towards future employment weakness
The NFIB Small Business Optimism Index fell for the third consecutive month to a lower-than-expected 97.4 in March, the lowest since October.
It was the third decline in a row and the sharpest three-month drop since January 2021, reversing most of the post-election bump in enthusiasm.
Optimism around small firms surged after the election, so it’s noteworthy that this index in the NFIB’s own words finds itself “below the 51-year average of 98.”
A few items within the report are worth further attention.
On the employment front, hiring plans weakened to their lowest level in a year – pointing to modest upward pressure on the unemployment rate in the near-term. At the same time, more firms reported an actual reduction in their staffing levels than an increase. These are unwelcome developments for future employment growth, and a potential readthrough to softness in the broader labor market in the coming months.
Also, for the third consecutive month, ~10% of small businesses pointed to “poor sales” as their single-most important problem. In the past, companies complaining about poor sales suggest we could expect to see upward pressure on the unemployment rate.
It should be noted the NFIB Survey was conducted in March and therefore doesn’t even capture the fallout following President Trump’s reciprocal tariff announcement from Wednesday, April 2. As such, expect these trends to persist, not reverse.
Many are expressing concerns about a potential recession given the rising economic risks and uncertainty, which leads to the worst possible outcome for hundreds of thousands of households: widespread job losses. This report supports that narrative.
Sources: NFIB, Ned Davis Research
That’s all for today.
Blake
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Blake Millard is the Director of Investments at Sandbox Financial Partners, a Registered Investment Advisor. All opinions expressed here are solely his opinion and do not express or reflect the opinion of Sandbox Financial Partners. This Substack channel is for informational purposes only and should not be construed as investment advice. The information and opinions provided within should not be taken as specific advice on the merits of any investment decision by the reader. Investors should conduct their own due diligence regarding the prospects of any security discussed herein based on such investors’ own review of publicly available information. Clients of Sandbox Financial Partners may maintain positions in the markets, indexes, corporations, and/or securities discussed within The Sandbox Daily. Any projections, market outlooks, or estimates stated here are forward looking statements and are inherently unreliable; they are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur.
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